Top 10 Scams of 2016 ---
https://www.scamguard.com/list-of-scams/?gclid=CIni6KfGhM8CFVVahgodlRoFCA
Jensen Comment
I get hit with the computer repair scam phone call several times a week that is
not a recording. Sometimes the scammers even pretend to be from Dell or
Microsoft. The best way to get them to swear out loud at you (with an India
accent) after you've humored them along for 15 minutes with questions is to
insist that they give you a phone number so you can call them back. You will
hear four letter words I did not think people used in India.

One of the top USA top scams are also those
IRS threatening phone calls (usually recorded messages) warning you that the
law will soon knock at your door if you don't make an IRS settlement now ---
http://www.local10.com/news/florida/beware-of-aggressive-irs-impersonators-telephone-scam-
I get one of these phony calls at least weekly. The IRS will not contact you by
telephone or email to warn you of a an issue with your return. The warning will
come by US mail. You may be invited to respond by telephone, but usually the IRS
likes to communicate by postal service mail or office visits.

We got hit as grandparents by a phony call from a supposed grandchild
allegedly arrested outside the USA. As luck would have it we did not fall for
it, although this is a very convincing scam for grandparents who do not talk
with a grandchild frequently on the telephone and are not quite fine tuned in to
voice recognition like we are with our children ---
"Grandparent
scam" explained: What you need to know ---
http://www.cbsnews.com/news/grandparent-scam-explained-by-former-scammer-what-you-need-to-know/
These days it's often more common for grandparents and some of their
grandchildren to communicate via email rather than telephone. If you get an
emergency request from a grandchild don't fall for it immediately unless you are
100% certain that the call is genuine. You can ask a grandchild a question that
a scammer cannot answer such as what did we do together during our most recent
visit. If you send money send it via something like a postal money order or
certified check rather than give out a credit card number or checking account
number.

Tax
practitioners and their clients are concerned about the growing epidemic of
tax-related identity theft in America - both refund theft and employment
theft. At the end of fiscal 2013, the IRS had almost 600,000 identity theft
cases in its inventory, according tothe IRS National Taxpayer Advocate.

The AICPA shares
members' concerns about the impact of identity theft and offers the
resources below to help them learn more about this issue and advise clients.
We have provided recommendations to Congress and the IRS Oversight Board on
ways to further protect taxpayers and preparers.

I don't know just why, but this site also has a link to having any
Website you choose evaluated for age, popularity, and a Google love rating.
For example, I keyed in my home page at
http://www.trinity.edu/rjensen/
Note that for some reason you have to delete the http:// part of the above
URL to get this to work. Thus to make it work I key in only www.trinity.edu/rjensen
I got 5.0/5.0 stars for age of the Webpage (I've been maintaining this page
for over 15 years), 3.5/5.0 stars for popularity, and 3.5/5.0 stars for a
Google love rating.

Tax
practitioners and their clients are concerned about the growing epidemic of
tax-related identity theft in America - both refund theft and employment
theft. At the end of fiscal 2013, the IRS had almost 600,000 identity theft
cases in its inventory, according tothe IRS National Taxpayer Advocate.

The AICPA shares
members' concerns about the impact of identity theft and offers the
resources below to help them learn more about this issue and advise clients.
We have provided recommendations to Congress and the IRS Oversight Board on
ways to further protect taxpayers and preparers.

The Investor Protection Trust provides independent,
objective information to help consumers make informed investment decisions.
Founded in 1993 as part of a multi-state settlement to resolve charges of
misconduct, IPT serves as an independent source of non-commercial investor
education materials. IPT operates programs under its own auspices and uses
grants to underwrite important initiatives carried out by other
organizations.

The Investor Protection Trust provides independent,
objective information to help consumers make informed investment decisions.
Founded in 1993 as part of a multi-state settlement to resolve charges of
misconduct, IPT serves as an independent source of non-commercial investor
education materials. IPT operates programs under its own auspices and uses
grants to underwrite important initiatives carried out by other
organizations.

He deconstructs the assumption that people always act
rationally, and explains how to promote rational
decisions in an irrational world.

Topics Covered:

1. The
Economic Definition Of Rationality

2.
Emphasis on Rationality in Modern Economic Theory

3. Examples of Irrational Behavior (watch this part)

4. How
to encourage rational decisions

Speaker Background (Via Fora.Tv)

Daniel
Kahneman - Daniel Kahneman is Eugene Higgins Professor
of Psychology and Professor of Public Affairs Emeritus
at Princeton University. He was educated at The Hebrew
University in Jerusalem and obtained his PhD in
Berkeley. He taught at The Hebrew University, at the
University of British Columbia and at Berkeley, and
joined the Princeton faculty in 1994, retiring in 2007.
He is best known for his contributions, with his late
colleague Amos Tversky, to the psychology of judgment
and decision making, which inspired the development of
behavioral economics in general, and of behavioral
finance in particular. This work earned Kahneman the
Nobel Prize in Economics in 2002 and many other honors

Video 2: Nancy Etcoff is part of a new vanguard of cognitive
researchers asking: What makes us happy? Why do we like beautiful things? And
how on earth did we evolve that way?Simoleon Sense, June 10, 2009
http://www.simoleonsense.com/science-of-happiness/

All Homeowners Should Take Note of This Likely Change in Their Homeowners'
Insurance Policies
Higher Deductibles Sting Homeowners...more insurers change how they calculate
deductibles, especially for damage caused by windstorms and other natural
events. The newer method of figuring deductibles is based on a percentage of the
insured value of your home -- typically between 1% and 5%, and even higher in
earthquake zones. With home prices having soared in many areas in recent years,
this often works out to be far more costly to the homeowner than the traditional
flat-dollar method of figuring deductibles, by which you pay the first $1,000 or
so of home repairs."Higher Deductibles Sting Homeowners," The Wall Street Journal via
Market Watch, August 1, 2007 ---
Click Here

Banking Online Safer Than Checks: Why you need a Uni-Ball pen!Phoenix is the city most at risk for identity fraud,
according to the Identity Theft Resource Center. Their new survey shows writing
a check is not safer than banking online because of a scam called "check
washing." The thief erases the ink on a check, fills in whatever he wants, and
cleans out your bank account. But never fear. Where there's a scam like check
fraud, there's sure to be a company with a profitable solution. Uni-Ball makes a
pen filled with a specially formulated ink that can't be washed off. It comes in
several elegant designs, for the sophisticated check-writer.
"Banking Online Safer Than Checks," NPR, October 5, 2007 ---
http://www.npr.org/templates/story/story.php?storyId=15027414
Jensen Comment
It might be a good idea to simply carry a Uni-Ball or similar "unwashable" ink
pen with your check book.

The Uni-Ball home page is at
http://www.uniball-na.com/
I think these pens or comparable pens are now carried in most office supply
stores.

HAVE FRAUD FEARS?
http://fvs.aicpa.org/Resources/Antifraud+Forensic+AccountingSearch no further than the AICPA’s offering of
antifraud and forensic accounting resources. Click “Tools and Aids”
to download Managing the Business Risk of Fraud: A Practical
Guide, which outlines principles for establishing effective
fraud risk management. The paper was released jointly by the AICPA,
the Association of Certified Fraud Examiners and The Institute of
Internal Auditors (see “Highlights,”
page 16). The site also offers fraud detection and prevention tips,
including an “Indicia of Fraud” checklist and case studies. There’s
also information on the newly created Certified in Financial
Forensics (CFF) credential (see “News
Digest,” Aug. 08, page 30) and upcoming Web seminars.

BE CRIME SMARTwww.fbi.gov/whitecollarcrime.htmThink of the most outrageous business fraud
scheme you’ve ever heard of— you’re likely to find it, plus hundreds
of other white-collar crime cases—at this site from the FBI. Look
under “Don’t Be Cheated” for a fraud awareness test or click on
“Know Your Frauds” for access to the FBI’s analysis of common fraud
schemes, including the prime bank note scheme, telemarketing fraud
and up-and-coming Internet scams. CPAs and financial professionals
can access details on options backdating, securities scams and
investment fraud under “Interesting Cases” or learn about the FBI’s
major programs involving corporate, hedge fund and bankruptcy fraud.

SURF THE FRAUD NET
www.auditnet.org/fraudnet.htmJim Kaplan, a government auditor and author of
The Auditor’s Guide to Internet Resources, 2nd Edition,
hosts this Internet portal for auditors, which provides fraud
policies, procedures, codes of ethics and articles on a range of
topics, including internal auditing, fraud risk mitigation and
preventing embezzlement. The site also features a newsfeed, piping
in daily fraud news from around the world..

The Investor Protection Trust provides independent,
objective information to help consumers make informed investment decisions.
Founded in 1993 as part of a multi-state settlement to resolve charges of
misconduct, IPT serves as an independent source of non-commercial investor
education materials. IPT operates programs under its own auspices and uses
grants to underwrite important initiatives carried out by other
organizations.

As a college president, I ask students and
graduates what are we doing correctly and what can we improve upon. The
typical responses to how we can improve are not surprising — more parking
and more financial aid (often in that order). Lately the most common answer
from recent graduates as to how we can improve has been surprising — more
education about financial literacy and the practical aspects of living in
today’s world.

I hear the following comments with increasing
frequency, particularly since the Great Recession of 2008:

had no idea of the impact of my student debt
and credit card debt on my ability to live a comfortable life after
college.

Living in the residence halls and dining at
the college, I didn’t need to know about budgeting and renting an
apartment. I had no idea how to create a budget so I could live
responsibly and comfortably on my salary.

In college I learned how to cultivate a
pointed argument, but quickly learned that in the workplace an
aggressive argument can get you fired. No one told me about how to
disagree with your boss and not have your job threatened.

Faculty and administrators at liberal arts colleges
do not shy at complex thinking. We tend to scrutinize the details even as we
comprehend the big picture. We look for connections among areas of thought,
and revel in a multitude of perspectives. By the end of their four years on
campus, our students have benefited from a well-rounded, richly layered
education. I believe most even recognize what it means to be liberally
educated. Having learned to "turn the crystal" as they develop their views
and goals, they are confident and able to find success on many levels.

Why then do so many recent graduates seem unable to
demonstrate sound decision-making in an area as fundamental as finances and
entering the work world?

Is it possible that in our efforts to foster
creative and critical problem solving, we neglect the basics of responsible
day-to-day living and working? As we carefully engage students in discerning
shades of gray, is it at the expense of black and white?

Two events have led me to ask these questions.
First is the number of conversations like those described above, with
graduates who confided to me their frustrating lack of “real-world”
financial knowledge. The second is the fact of the high loan default rate
among recent college graduates, which is 7 percent nationwide (Augustana’s
rate is 4.2 percent). I know I am not alone in asking the question: What
should we do?

Personal Prosperity and the Common Good

Jon Meacham, the former editor of Newsweek,
addressed the 2011 Council of Independent College Presidents Institute.
Meacham praised the role of liberal education, noting that "people who know
about Shakespeare tend to create the Internet." But if appreciating
Shakespeare and other skills common to a liberal education is viewed by most
as "quaint and quirky," liberal education will not survive. Instead, he
argues that liberal education must be "vital and relevant" by "training
young minds to solve problems and to see what others have yet to see and to
think energetically about creating jobs and wealth," which Meacham calls the
"oxygen of democracy."

I'd go one step further than Meacham. Our graduates
can’t create wealth and jobs if they don’t have the ability to balance a
checkbook, or the skills to hold a job.

When asked to define "personal success," I think it
is fair to suggest that most college freshmen would put "financial success"
toward the top of their list. As they begin taking liberal arts courses,
they connect their learning to other aspects of their lives, and many begin
to think of a career as something more than just a paycheck. They develop
meaningful working relationships with faculty members and other students,
and may experience some peaks in their education — whether through an
internship, international study, research with faculty or other achievements
in their major studies. Their definition of success develops more facets.

At Augustana College, we have long promoted
high-impact learning experiences as well as the close relationships that
allow integrated and collaborative learning to flourish. Recently we have
begun to take new steps toward teaching certain life skills fundamental to
ensuring success of all kinds.

Leadership about financial literacy must come from
the top. I remind our students that if they live like college graduates with
good jobs while they are students, their debt levels will cause them to live
like students when they graduate. Going out to a mid-priced restaurant twice
a week for four years could easily cost $8,000. Putting those charges on a
credit card and carrying the balance over four years tips the cost to well
over $10,000.

Five years ago, before the severe economic
downturn, we introduced a class on personal finance. Offered each spring and
fall term, the class is packed with seniors and some juniors. Having read
Plato and Neruda, spent hours upon hours working in our human cadaver or
volcano lab, or climbed Machu Picchu, these students suspect they must
improve their financial literacy before they graduate.

Their instructor, an alumnus retired banker, begins
by teaching how to use financial templates. The students create a personal
profile and then produce a cash flow statement for the previous year. After
clarifying their own understanding of their financial history, which
generally is filled with gaps until this class, they work with their
instructor on the process of creating a budget for the next year. Taking
into account three to four personal financial goals (e.g., paying for
students loans, emergency funds, etc., and even retirement), the students
lay their financial path for the future. At all times throughout the class
they keep in mind their current net worth, and how that value should affect
their financial decisions. The course is such a success that, given the
financial illiteracy demonstrated by too many young alumni, we now are
offering a free three-hour seminar as a "crash course" in personal finance
for our graduating seniors.

Sharing Responsibility

Augustana is not the only liberal arts college to
offer such a class, and there is more we all can do. Many liberal arts
colleges are adding majors that address personal financial viability in a
changing world and also attract prospective students in an increasingly
competitive market.

Augustana’s newest majors — which extend from
traditional majors — include graphic design, neuroscience, environmental
studies, multimedia journalism and engineering physics, among others. While
some of our faculty state concerns that our college’s liberal arts
foundation might be shaken by the contemporary and perhaps more fiscal focus
of these programs,
most see the new majors as logical progressionsof
traditional fields and therefore deeply related to our college’s mission.

Every night at
bedtime, former Celtic Ray Williams locks the doors of his home: a
broken-down 1992 Buick, rusting on a back street where he ran out of
everything.

The 10-year NBA
veteran formerly known as “Sugar Ray’’ leans back in the driver’s seat,
drapes his legs over the center console, and rests his head on a pillow of
tattered towels. He tunes his boom box to gospel music, closes his eyes, and
wonders.

Williams, a
generation removed from staying in first-class hotels with Larry Bird and
Co. in their drive to the 1985 NBA Finals, mostly wonders how much more he
can bear. He is not new to poverty, illness, homelessness. Or quiet
desperation.

In recent weeks, he
has lived on bread and water.

“They say God won’t
give you more than you can handle,’’ Williams said in his roadside sedan.
“But this is wearing me out.’’

A former top-10 NBA
draft pick who once scored 52 points in a game, Williams is a face of
big-time basketball’s underclass. As the NBA employs players whose average
annual salaries top $5 million, Williams is among scores of retired players
for whom the good life vanished not long after the final whistle.

Dozens of NBA
retirees, including Williams and his brother, Gus, a two-time All-Star, have
sought bankruptcy protection.

“Ray is like many
players who invested so much of their lives in basketball,’’ said Mike
Glenn, who played 10 years in the NBA, including three with Williams and the
New York Knicks. “When the dividends stopped coming, the problems started
escalating. It’s a cold reality.’’

Williams, 55 and
diabetic, wants the titans of today’s NBA to help take care of him and other
retirees who have plenty of time to watch games but no televisions to do so.
He needs food, shelter, cash for car repairs, and a job, and he believes the
multibillion-dollar league and its players should treat him as if he were a
teammate in distress.

One thing Williams
especially wants them to know: Unlike many troubled ex-players, he has never
fallen prey to drugs, alcohol, or gambling.

“When I played the
game, they always talked about loyalty to the team,’’ Williams said. “Well,
where’s the loyalty and compassion for ex-players who are hurting? We opened
the door for these guys whose salaries are through the roof.’’

Unfortunately for
Williams, the NBA-related organizations best suited to help him have closed
their checkbooks to him. The NBA Legends Foundation, which awarded him
grants totaling more than $10,000 in 1996 and 2004, denied his recent
request for help. So did the NBA Retired Players Association, which in the
past year gave him two grants totaling $2,000.

Jensen Comment
When I was teaching the mathematics of finance one of my favorite illustrations
was not mentioned in the above "scams." Scam 22 should be understating the
annual percentage rate (APR) of a car financing contract. My bottom line advice
to my students is to never, never indicate that the purchase will be anything
other than a cash purchase until the very last moment before signing the
purchase contract.

Presumably a buyer is shrewd enough to have negotiated a rock-bottom cash
price. For new cars this is easy since there are various Web sites for comparing
new car purchases. It's bit more difficult for used cars since every used car is
unique.

Are you compatible with your car? A new site set to
launch in a few days calledCarzen(http://new.carzen.com/)
aims to help you find the car that is perfect for you. The main feature of
the site is a car consulting tool that asks you basic questions about the
qualities you are looking for in a car (price, size, fuel economy,
reliability) and then spits back a list with the best matches

CarZen is extremely detailed. You can narrow your
search by brand, options (sunroof, power seats), cargo capacity, safety, or
performance characteristics. Looking for a car with a high baby-seat score
or on ethat is particularly easy to park in tight city spots? No problem.
Once you finish answering the questions, which at times seem more like a
personality test, the site generates a list of cars that can be sorted by
best match, price, miles per gallon, or brand.

If you are looking for a new car and don't already
know what you want, it is a good way to generate an initial list. You can
drill down to get more details for each car. There is even a button to get a
price quote, although that doesn't seem to be working at the moment.
(Nevertheless, the business model is to create a trusted research tool for
car buyers and generate lead-generation fees). The site is still in private
beta, but you can check it out by clicking on the "learn more" button in the
widget below and then clicking through to the site.

After negotiating the rock-bottom cash price is the time to then ask about
financing alternatives. Devious dealers who report low APR financing rates often
do so on the basis of a car price higher than the rock-bottom cash price. Shrewd
car buyers will whip out a financial calculator, tablet computer, or laptop and
then verify the true annual percentage rate of the car dealer's financial deal.

This is important in accountancy, because all organizations need internal
controls to detect counterfeit currency
Read more about counterfeit currency from a very good module at
http://en.wikipedia.org/wiki/Counterfeit
Probably the biggest fear of worldwide criminals is that world economies will go
cashless.

09. Oh, I'm so glad you called! My niece is selling Girl Scout cookies.
How many boxes would you like?

08. Who's your long_distance carrier? I think I can save you money!

07. You sound gay. Did you know that through the love of Our Savior,
Jesus Christ, you can give up that lifestyle?

06. Do you hear voices, like I do, telling you to buy lots of guns?

05. Are you a non_smoker, 55 or under? Let me tell you about whole life.

04. You seem pretty smart, so maybe you know: How long do you think it
would take to get a whole body down a garbage disposal?

03. If Superman and the Power Rangers got into a fight, who do you think
would win?

02. Do you take credit cards? I have one here that I don't think has been
reported.

And my number one best response to that pesky caller is...

01. What do you think of my sex change?

Forwarded by Paula

What do you say to a telemarketer?

The phone rang as I was sitting down to my
evening meal, and as I answered it I was greeted with, "Is this Karl
Brummer?" Not sounding anything like my name. I asked, "Who is calling?"

The telemarketer said he was with The Rubber
Band Powered Freezer Company or something like that. Then I asked him if
he knew Karl Brummer personally and asked why he was calling this
number.

I then said (off to the side), "get some
pictures of the body at various angles and the blood smears", I then
turned back to the phone and advised the caller that he had just called
a murder scene and must stay on the line because we had already traced
his call and he would be receiving a summons to testify in this murder
case.

I questioned the caller at great length as to
his name, address, phone number at home, at work, who he worked for, how
he knew the dead guy and could he prove where he had been about one hour
before he made this call.

The telemarketer was getting very concerned and
his answers were given in a shaky voice. I then told him we had located
his position and the police were entering the building to take him into
custody. At that point I heard the phone fall and the scurrying of his
running away.

My wife asked me as I returned to our table why
I had tears streaming down my face, and so help me, I couldn't tell her
for about 15 minutes. My meal was cold but it was the best meal in a
long, long time.

The purpose of this study is to examine the
frequency, determinants, and implications of misreported fundraising
activities. We compare state telemarketing campaign reports with the
associated information from nonprofits’ annual Form 990 filings to directly
test nonprofits’ revenue and expense recognition policies. Using a
conservative approach that understates the extent to which nonprofit
organizations violate the reporting rules, our study indicates that 74
percent of the regulatory filings from nonprofit organizations fail to
properly report telemarketing expenses. Smaller nonprofits, less monitored
firms, and those with less accounting sophistication are more likely to
inappropriately report telemarketing costs as a component of net revenues
rather than as expenses. Nonprofits that use external accounting services
are more likely to properly classify the cost of their telemarketing
campaigns as professional fundraising fees.

. . .

Prior research has supported a concern
by regulators and donors that nonprofits have incentives to understate
fundraising costs and may inappropriately allocate these costs to other
activities. Additionally, a number of studies provide evidence that donors
direct their charitable gifts to nonprofits that report higher program
ratios and lower fundraising ratios. With more than 76 percent of the more
than $240 billion in annual contributions to nonprofits in the U.S. coming
from individual donors (American Association of Fundraising Counsel [AAFRC]
Trust for Philanthropy 2003), misreporting by nonprofits can potentially
have a large effect on the distribution of donations among nonprofit
organizations.

Our study provides empirical evidence
of how frequently fundraising costs are misreported, and examines the
methods used and the factors associated with these decisions. This study
directly tests the veracity of nonprofits’ reporting practices by comparing
federally mandated nonprofit financial reports to disclosures of revenues
and costs of telemarketing campaigns filed by telemarketing solicitors in
certain states. Additionally, it is the first paper to specifically consider
the effect of accounting sophistication on nonprofit reporting practices.

We design our tests to produce
conservative estimates of telemarketing revenue and expense by using only
the single largest reported telemarketing campaigns conducted each year for
a nonprofit by each of its telemarketing solicitors. These estimates of
total annual telemarketing revenues and expenses are then compared to the
nonprofit’s annual IRS informational filing. Because our design biases
against incorrectly labeling a nonprofit a misreporter, we may not have
fully detected net reporting, particularly by organizations with
contributions raised without the assistance of professional solicitors. This
is particularly a concern for the larger organizations in our sample as they
are more likely to generate contributions from multiple sources. Thus, we
may have underestimated the degree to which misreporting occurs.

Despite our conservative test design,
we find that over 74 percent of the organizations in our sample fail to
properly report telemarketing expenses. Twenty-seven percent of firm-years
contain misreported revenues. Of the remaining 73 percent, a majority
misclassify their reported costs in a category other than professional
fundraising fees, and 9 percent engage in cost allocations, meaning that not
all telemarketing costs are reported as fundraising expenses. Using an even
more conservative design that compared a single year ofcampaign revenue and
expenses to the sum of three years of firm-wide contributions and
fundraising expenses, 14 percent of this sample is misreporting revenues. Of
the remaining sample, 53 percent report telemarketing expenses as other than
professional fundraising fees and, at least, another 4 percent is allocating
telemarketing costs to an expense category other than fundraising.

Our results provide strong evidence
that nonprofits misreport telemarketing fees, which affects how program and
fundraising ratios are reported. The effect on reported ratios of
misreporting is substantial. We find that by misreporting telemarketing
expenses the nonprofits in our sample could understate the fundraising ratio
by as much as 15 percent. Of the misreporting we detect, most occurs among
small nonprofits that have limited accounting sophistication. Our findings
suggest that nonprofits that have greater accounting sophistication and
those likely to be subjected to greater external monitoring are less likely
to be classified as a misreporting firm. We find that the factors associated
with the more prevalent activity of misreporting revenue differ from those
related to expense classification and allocation. Higher accounting
sophistication and more external monitoring appear to play a greater role in
moderating revenue misreporting. Only the use of professional outside
accountants appears related to proper classification of telemarketing costs
as professional fees. We interpret these results as suggesting that
misreporting decisions may be driven either by incentives to improve
reported results or a lack of familiarity with accounting. Prior research
has implicitly or explicitly attributed misreporting to managerial
incentives. Our study is the first to specifically consider accounting
sophistication as a factor inmisreporting.

SOP 98-2 requires nonprofit
organizations to allocate costs incurred jointly for fundraising and program
activities to several expense categories. However, the occurrence of expense
allocation should be related to the joint activity, not systematically
associated with organizational characteristics. Allocation of telemarketing
costs to an expense category other than fundraising is less often associated
with larger organizations and those that have relatively higher levels of
debt. This finding implies that allocation may occur more often in small
organizations in order to improve reported fundraising ratios, or is more
prevalent in organizations that have less accounting sophistication or fewer
monitoring mechanisms.

These findings can inform the current
debates by state and federal regulators as they search for ways to improve
the quality of nonprofit financial reports. In particular, we provide
evidence to policy makers that, in addition to regulation and monitoring,
educating Form 990 preparers can improve accounting quality.

Simson Garfinkel takes a look at
authority and sourcing in Wikipedia worldwith an
article in the latest edition of Technology Review. He focuses on
Wikipedia’s requirement to cite published sources in adding information to
Wikipedia articles. Yes, with a mob-written encyclopedia, a requirement for
citing published, vetted sources makes sense, he writes.

“But there is a problem with appealing to the
authority of other people’s written words: Many publications don’t do any
fact checking at all, and many of those that do simply call up the subject
of the article and ask if the writer got the facts wrong or right,” Mr.
Garfinkel writes. “For instance, Dun and Bradstreet gets the information for
its small-business information reports in part by asking those very same
small businesses to fill out questionnaires about themselves.”

This policy is particularly problematic if you are
the authority on a particular topic, but you can’t use your own base of
knowledge. Jaron Lanier, a futurist, had problems changing a statement on
the Wikipedia entry about himself that said he was a filmmaker. He wasn’t a
filmmaker, yet every time he removed that non-fact, someone put it back in.

He finally got the item changed, but was then
criticized for editing his own wikientry. (PR directors who maintain their
college Wikipedia pages, take note.)

Comments

Doesn’t the problem of unreliability of other sources apply to
any secondary or tertiary work? ;) (…and on that note, I suggest
reading the Wikipedia page
Wikipedia:Reliable sources …)

"Online User Reviews: Can They Be Trusted? They're all over the Web.
Everybody reads them. But are reader reviews reliable enough to depend on when
it comes to spending your cold, hard cash?" by Robert Luhn, PC World via
The Washington Post, October 23, 2008 ---
Click Here

Anyone can write a product review, and everybody
reads them. But can you trust them? I refer, of course, to reader or user
reviews, the kind you find on Amazon, Buy.com, Epinions, PC World, Yelp, and
even the sites of tech product manufacturers, such as Dell. They're
everywhere.

But it's the fraudulent reviews--positive reviews
contributed by "readers" paid by the company being evaluated--that worry
critics and advocates alike.

In an October 2007 poll conducted by the PR firm
Burson-Marsteller, 1000 savvy Web consumers (dubbed "e-fluentials" by some
wordsmith who evidently was unfamiliar with the term " effluent") were
clearly convinced that fake reviews are endemic--and could result in a
backlash from online consumers.

The numbers tell the tale: 48% (up from 39% in
2001) believe that fake reviews are being planted on consumer sites. 57% say
they won't buy a product if the reader reviews seem suspect. And a whopping
76% claim to double-check what they read online. All are signs of a healthy
skepticism.

WebWatch--whose motto is "Look Before You Click"--
says on its site that its credibility campaign has led more than 170 sites,
including CNN, CNet, The New York Times, Travelocity, and Orbitz to agree to
uphold WebWatch's credibility guidelines.

Barbara Kasser, author of Online Shopping Directory
For Dummies and Internet Shopping Yellow Pages, says: "There's no way to
check the reviewer's veracity or if they're on the take--they're anonymous."
Another concern: the reviewer might not be competent. "How did [the
reviewer] use the product? Did they use it properly? Did they follow the
manufacturer's directions? There's no way to know," she points out.

Why So Enticing?

Many ordinary people consider reviews written by
consumers to be more reliable, more critical, and ultimately, more useful
than many other sources of information. At least that's what they told The
Nielsen Company in a survey conducted in April 2007. The top three most
trusted sources: "Recommendations from consumers" (78%), "Newspapers" (63%),
and "Consumer opinions posted online" (61%). (In a story that PC World
posted in 2003, we generally agreed with the above perceptions--but we're a
bit more cynical now.)

Certainly, reader reviews have come a long way
since the era of Usenet and reader forums. Depending on the site and its
readers, you may find pithy commentary, long-winded rants, numeric ratings,
pros and cons, graphs, and even reviewer videos.

But Mitch Meyerson, author of the book Guerilla
Marketing on the Internet, thinks that "influenced" reviews (paid for or
not) are pretty common. For example, says Meyerson, "authors often enlist
friends, colleagues, and clients to review their books on Amazon."

According to Blogging Tips founder and Web
developer Kevin Muldoon, "tech sites usually have fair, accurate [reader]
reviews...but there are definitely more fake reviews [on sites] covering
cosmetics and hotels." Read Muldoon's blog entry on his own guidelines for
how he reviews products.

I received the
following from a close personal friend who is also the Director of Instructional
Services at Loyola College in Maryland.

I elected to opt
out using the Consumer Reports Web address given near the bottom of his message.
You have to feed in the information to get a form that you then mail in via the
postal service. The form is automatically filled in from the information that
you typed in earlier. All you have to do is sign and date the form.

I sent in a
second form in my wife’s name.

By the way, have
you ever had troubles with forms that seem to do things like automatically
change your state initials in a list box? The trick to avoid this is to not
leave your cursor in that list box when you submit an electronic form. Click on
some open-ended box such as your name box or a comment box before submitting the
form.

[The following was written
for my family members, most of whom are not technically sophisticated. Feel
free to share this information with YOUR family.]

I was just looking at a
credit card offer before shredding it and noticed an 888 toll-free number
where I could opt out of getting such junk mail. When I searched for more
information about this in Consumer Reports, I found a free article that says
you can "Remove your name from preapproved offers for credit or insurance by
going to
www.optoutprescreen.com or calling 888-5-OPT-OUT. And if
you're willing to deny yourself unsolicited catalogs and junk mail, opt out
at the Direct Marketing Association site (
www.the-dma.org/cgi/offmailinglist) ."

The 888-5-OPT-OUT number
above is the same one on the bottom of my credit card offer. However, I
choose to use the
www.optoutprescreen.com Web site for my own opt out. It requires
you to enter your name, address, Social Security number and date of birth. I
am convinced it is safe to do so because of the Consumer Reports
recommendation and because the above link takes you to
https://www.optoutprescreen.com/?rf=t which is secure since it has the
"s" after "http." The page also has information about how your information
is secure.

If you are a
Verizon Wireless customer, you may know that Verizon does
some shady things to make their revenue streams fatter. This
morning I got a letter from Verizon Wireless telling me that
they will start putting ads on my phone. Lucky for me they
are required to have some manner of opt-out functionality in
place. When I looked inside the pamphlet, I saw the number
for the opt-out. It is 1.800.333.9956. I called that number
and got a very nice automated option to opt out.

I encourage
all of my fellow Verizon Wireless customers to send a VERY
strong message to the folks at One Verizon Way and opt out.
Opt out even if you’re not a Verizon Wireless customer. Send
letters to the address “One Verizon Way, Basking Ridge, NJ
07920-1097″ and tell them how disgusted you are with this
new practice.

It is not
okay for Verizon Wireless to put these ads on our personal
property, and if we stand silent while they do it we will be
in a world of hurt. But act fast, because according to these
terms, Verizon Wireless will only give you 30 days to opt
out.

UPDATE:
So, I’ve got some more info for you. Verizon Wireless, in
their agreement, says that you have the right to cancel your
service with them without paying early
termination fees for cancelling.

Turns out all they want to do is sell the “routine”
data they collect through my day to day use of my cell phone. If I decided
to opt out, they warned that I would be denying myself the benefit of their
benevolent oversight of my information and their ability to make the
cell-phone-using portion of my life downright super-duper
puppies-and-unicorns AWESOME. I’d rather not have Verizon selling my info to
every company that would want to buy it, so I opted out by calling this
number:

1 800 333 9956

You may want to give it a ring, too, if you have
Verizon Wireless and you don’t trust them to keep your personal information
in your best interest. Best part? If you don’t call 1 800 333 9956 you’re
automatically opted-in, so you may have been boned already. Give the number
a call if you’d like to keep your information out of the hands of any
douchetastic company that throws a fistful of dollars at Verizon.

Jensen Comment
Breaking your wireless agreement may depend a lot upon the small print in the
agreement you got in writing when you purchased your phone. If you cannot get
out of your early termination fees, wait your time and change from Verizon
Wireless as soon as you get with a more honest company that does not make you
waste a lot of time and trouble to keep your private information private.

People who visit www.intelius.com
can enter a person's name to get a cell phone number, or do the reverse by
entering a number to get the subscriber's name. Each search costs $15. They can
also download a raft of personal information about the subscriber. This was a
feature on ABC evening news, August 14, 2007.
There are many
cell phone numbers, however, that do not make it into the Intelius database,
especially numbers of subscribers who never gave their phone numbers out to any
organization or dialed up a 911 emergency.

"Free Cell Phone Number Search - How To Find Free Cell Phone Numbers," ---
Click Here
The freebies are not really very worthwhile relative to the fee-based services.

Jensen Comment
This will be terribly frustrating if telemarketers and crank callers begin to
use up your allotted free minutes of cell phone time each month.

You may enter your cell phone numbers into the "Do Not Call" registry the
same as you probably did for your landline phone ---
https://www.donotcall.gov/default.aspx
However, telemarketers are not supposed to call cell phones with automatic
dialers ---
https://www.donotcall.gov/default.aspx
This is no protection, however, from crank callers or telemarketers who take the
trouble to dial in your cell phone number. Of course, being in the "Do Not Call"
registry does not protect you from telemarketing charitable organizations that
are typically the biggest nuisance these days. Also the "Do Not Call Register"
provides no guarantee that you will not get calls from commercial telemarketers,
especially those who fly by night.

It might just pay to get the cell phone numbers of your state Senators and
local Congressional representative and call them late at night at home on their
supposedly "personal" cell phones. Better yet, call their children and ask them
to tell their parents how you got their phone numbers.

Note that if you've never given a cell phone number out to any organization
other than your phone company, Intelius may not have your cell phone number in
its dastardly database. You should make your children aware of this. Even
emergency calls to 911 may result in Intelius getting your cell phone number
according to the fine print in my Verizon Wireless contract.

To my knowledge there's no unlisted phone service for cell phones like the
one that you can pay for monthly on your landline number

Janella Spears of
Sweet Home says she simply became curious when she received an e-mail promising her
$20.5 million if she would only help out a long-lost relative identified as
J.B. Spears with a little money up front.

Spears told
KATU-TV about the scammers' ability to identify her relative by name was
persuasive.

"That's what got
me to believe it," She said. "So, why wouldn't you send over $100?"

Spears, who is a
nursing administrator and CPR teacher, said
she mortgaged the house and took a lien out on the family car, and ran
through her husband's retirement account.

"The retirement he
was dreaming of — cruising and going around and seeing America — is pretty
much gone for him right now," she said.

Her family and bank officials told her it was all a
scam, she said, and begged her to stop, but she persisted because she became
obsessed with getting paid.

The scheme is often called the "Nigerian scam" and
it's familiar to many people with e-mail accounts. It still exists and it
still works.

Spears first sent $100 through an untraceable wire
service as directed by the scammers. Then, more multimillion dollar promises
followed so long as she sent more money.

The scammers sent Spears official-looking documents
and certificates from the Bank of Nigeria and the United Nations. President
Bush and FBI Director Robert Mueller were also involved, the e-mails said,
and needed her help.

They sent official-looking documents and
certificates from the Bank of Nigeria and even from the United Nations,
saying her payment was "guaranteed."

But it wasn't and now Spears is paying the price
for her costly lesson.

"The hope is [other people] are not going to fall
as hard as I fell," Spears said.

Jensen Comment
Even the familiar Nigerian-type scams are still enormously
successful. These scams are the second most lucrative export (oil is
number one) from Nigeria, and Nigeria is only one of many places in
the world where such scams originate. Many also come from Eastern
Europe where technology geniuses are always miles ahead of law
enforcement and vendor security protection upgrades ---
http://www.trinity.edu/rjensen/FraudReporting.htm#NigerianFraud

Who are these perpetrators of Nigerian frauds?A good cyber-scammer can make up to $7,000 a month
- 22 times the average Nigerian wage - from milking gullible Westerners. His
controlling boss, with an army of trained scammers under his wing in both
America and Europe, will be raking in many times more. Though the fraud is
apparent to many, some people think they have stumbled on a once-in-a-lifetime
deal, and scammers can string them along for months with mythical difficulties.
Some victims eventually contribute huge sums of money to save the deal when it
is suddenly "at risk". Samuel is 19, handsome, bright, well-dressed and
ambitious. He has a special flair for computers and until he quit the game last
year was one of Festac's best-known cyber-scam champions.
Robyn Dixon, "Run-down town where scammers target the West,"
Scotsman,
October 30, 2005 ---
http://news.scotsman.com/international.cfm?id=2168172005

New Scam on eBay and Craig's List: OverpaymentsWhen is a “cleared
check” not necessarily a good check?

Selling something on eBay or Craig's List? Watch
out for who's signing the check to buy it.

Tens of thousands of Americans are being targeted
by the latest scam sweeping America, many of them targeted online through
Craig's List and eBay.

Scammers overpay with counterfeit checks that look
so good most banks accept them. It's only after victims have sent the
overpayment amount back to the scammers that they learn the checks are no
good, and they are out the money.

U.S. Postal Service officials say they have seized
more than $2 billion worth of high-quality counterfeit checks coming from
Nigeria, England, the Netherlands and Canada.

But, they say, many more phonies are still getting
through. . That's the kind of check Jill Parker, a pharmaceutical company
manager in Richmond, Va., got in the mail.

Using Craig's List to rent an apartment she owned
in Chicago, she was contacted by someone moving from London.

"He was going to send me a check for $25,000," she
told ABC News. "I was to deduct what he owned me for the first month's rent
and the security deposit, and I was to wire the balance back to his agent,
who was handling his furnishing."

She took the check to her bank and called a few
days later to see if it had cleared. Told that it had, Jill, as agreed upon,
wired the remaining $21,000, thinking she was ahead $4,000.

"Everything looked great; everything went fine
until about a week later," she said.

The bank informed her that the check was no good
and had been returned not paid. And Jill, not the bank, was out the money.

American banks say they are required by law to make
the money available well before a final determination is made as to whether
the check is good.

"Certain funds, for example, have to be available
on the day after deposit," Nedda Feddis, senior federal counsel for the
American Bankers Association, told ABC News. "And the fraudsters are taking
advantage of that rule."

Chris Soens, suffering from health problems,
thought she got a dose of good news in the mail when she won $90,000 in a
supposed European lottery.

Once the check had been deposited and posted to her
account, Chris wired back $40,000 for what she was told were fees and taxes.

When the check was discovered to be a phony, the
bank told Chris she had to repay the entire amount.

Her sister, Rebecca Woodworth, says it led to
suicide.

"I think she was devastated," she said. "I think
she was plunged into depths of despair knowing that everything she had was
gone."

The problem has grown so large that the U.S. Postal
Service is launching a nationwide TV campaign starting tomorrow to warn
Americans about the dangers of the bad check scam. The Postal Service has
also set up a new Web site to educate the public on check fraud:www.fakechecks.org
.

The general pitch may be built around a sob story, a
promise of lottery winnings, a foreign business offer or a work-at-home
opportunity. But the bottom-line offer is the same: We'll send you a check, you
cash it at your bank, and you keep a portion and send the rest back to us.
Americans appear to be increasingly susceptible to such scams, according to U.S.
Postal Inspection Service investigators, who yesterday announced a crackdown.
They said they intercepted 540,000 checks worth more than $2.1 billion mailed to
U.S. residents in the first eight months of the year. They said 77 people had
been arrested in connection with the schemes -- 60 in the Netherlands, 16 in
Nigeria and one in Canada. Aided by authorities in those countries and in
Britain, investigators said, they had traced many of the come-ons to a shifting
network of Nigerians who, with a few computers, cellphones and bank routing
numbers, have been cashing in on the naivete, goodwill or complicity of Internet
users. Anita Huslin, "Crackdown Takes Aim At Check-Cashing Scams," The
Washington Post, October 4, 2007, Page D02 ---
Click Here

They pilfer nearly $200 million from Americans
annually and drive some of their victims to suicide, but Nigeria's notorious
e-mail scam artists may finally have met their match -- and the results can
be hilarious.

British online vigilante
"Shiver Metimbers" is leading tens of thousands of "scambaiters" in a
crusade to shut down
advance-fee fraudsters, grifters who spam
unwitting victims with elaborate, e-mailed sob stories promising a share of
nonexistent fortunes in return for upfront payments.

So-called 419 scams, named after the section of
Nigeria's criminal code that covers the conduct, are the most common type of
con; victims are sometimes left penniless.

But
Metimbersand crew turn the tables on scammers one
by one, boomeranging the tricksters' own tactics to entice them into
performing outlandish tasks in desperate pursuit of cash -- then trumpeting
evidence of the con artists' naïveté for the online world's amusement.

A 43-year-old, self-employed computer engineer from
Manchester, England, Metimbers has most recently spun counter-yarns that
have compelled 419ers to make elaboratewood
carvings, pose forcomical photosandflyfrom London to Scotland. In one episode, which
concluded in March after a five-month exchange, he succeeded in having a
Nigerian fraudstertattoo"Baited by Shiver" on his body in order to claim a
fictional $46,000 prize.

"Another time, the scammer thought he was going to
get $18,000 out of me, but I actually got the guy to send me $80," said
Metimbers, who started the419 Eatercommunity site almost three years ago after receiving
a wave of spam in his inbox.

"I've got between five and 10 on the go at any one
time," Metimbers said. "The worst thing that could possibly happen to these
guys is they get their photo slapped on a website. I feel like a
cybervigilante, doing my bit for the public."

Metimbers, whose real forename is Mike and who
spends up to seven hours a day scambaiting, is team captain in a growing
internet blood sport, in which photographic evidence of competing baiters'
successes constitutetrophies.

419 Eater alone numbers more than 20,000
participants around the world. Other initiatives
have also surfaced in the anti-scam resistance movement, includingArtists
Against 419, which kills criminals' online
accounts with a deluge of traffic. Baiters delight in convincing
correspondents to be photographed with embarrassing and lewd Western banners
-- like Metimbers, they operate using aliases to protect themselves against
the death threats issued by disgruntled scammers upon realizing they have
been had.

"Shiver is exceedingly creative in getting scammers
to allow their greed to override their judgment," said one disciple
nicknamed
mrsbean, a 29-year-old female IT worker from
Kentucky who claims to have wasted months of organized scammers' time.

"It is equal parts theater, chess game,
psychological study, crime prevention, education and vigilante justice; it's
a battle of the wits," said mrsbean. "Internet scams are unique in that they
offer you an opportunity to personally combat them without compromising your
own safety; the same is just not true of most crime -- one wouldn't take on
the drug dealers in a local neighborhood, for instance.

"The threat of jail certainly doesn't deter these
people, but being humiliated in front of their peers just might cost them
some reputation. It's likely the only punishment most scammers get."

Advance-fee fraud boomed in Nigeria as government
corruption and an economic downturn during the 1990s fueled poverty and
disillusionment in the country, saidInsa
Nolteof the University of Birmingham's Centre of
West African Studies.

To some, internet scams looked like an easy way to
bag some quick cash.

"The availability of e-mail helped to transform a
local form of fraud into one of Nigeria's most important export industries,"
Nolte said.

Some law enforcers trying to shut down 419 scammers
now look on scambaiters' brand of Schadenfreude with envy. The419legal.orgmessage board was started by a South African antifraud
officer to gather intelligence from worldwide combatants, while London's
Metropolitan Police said it began a "coordinated approach" this month to get
tips directed from baiter sites to
proper channels. But investigators warn the
counter-criminals are walking a fine line.

"People do it as a hobby or a part-time
occupation," said detective Sgt. Stephen Truick of the Met'sEconomic and
Specialist Crime Operational Command Unit. "But
what they often don't realize is that, while they are baiting, these
criminals' accounts are left open and other people are still getting
scammed.

"We are taking down around 200 sites and up to
2,000 e-mail accounts per month -- we are turning the tide," said Truick.
"We've seen our traffic from sites like these increase -- that's been
brilliant, but I could never condone some of their actions."

How to Report Internet Fraud

Although Internet scams and fraud can be found in almost sector on the
Internet, some common scams include: Internet auction fraud, emails with
foreign officials asking for money, miracle health claims, and credit card
and identity theft.

Fraud Tips

Many people encounter problems with online auctions, often bidding on an
item on a popular auction site, making a payment when they win, but never
receiving what they bought. In other cases, people buy something but when
the item gets to their home, it’s not what they paid for. In other
instances, some people receive mysterious emails claiming that someone needs
to move a large amount of money into the US, but they can’t do it themselves
so they need help from a third party. They tell people to deposit a check
with a big figure and send back a small percentage of the total amount.
Then, the check will bounce and the person will be cheated out of their
money. It’s also common for personal information like credit card
information or social security numbers to be stolen when hackers hack
shopping sites. Here’s a look at more Internet scams.

Internet fraud has become so prevalent that many established
organizations now have divisions that are designed to exclusively target it.
The Department of Justice, FBI, and FTC all have special sectors devoted to
fighting Internet fraud. Many consumer protection agencies also have special
Internet fraud sections including the Federal Trade Commission, National
Consumers League, and even the US Postal Inspection Service.

The government actually set up a special website where you can file a
complaint online. It’s quick and easy. This organization is known as the
Internet Fraud Complaint Center. All you have to do is go to the website,
fill out the complaint form with accurate information and submit it. The
IFCC then conducts an investigation and decides if it has to be turned over
to the authorities.

Read the Fine Print in Your Life Insurance Policy and Its AmendmentsMany life insurers, including Allstate Corp., AXA
Equitable Life Insurance Co., Fidelity Investments, Lincoln Financial Group,
MetLife Inc., New York Life Insurance Co. and Prudential Financial Inc., use
customers' overseas-travel plans as a factor in making underwriting decisions,
and some may deny a policy or increase premiums to customers going to countries
deemed dangerous. Some companies even deny coverage based on previous travel to
a dangerous region. The countries that trigger denials are often on the State
Department's travel warning list, which includes popular destinations such as
Israel, Indonesia and Kenya.
Rachel Emma Silverman, "Life Insurers Face Backlash Over Policy on Foreign
Travel: New Laws Curb Practice Of Denying Coverage to People Who Visit
Certain Countries," The Wall Street Journal, May 4, 2006; Page D1 ---
http://online.wsj.com/article/SB114670871469043437.html?mod=todays_us_nonsub_pj

At one time or another, all of us have been handed
a Christmas or birthday gift list that includes seemingly simple items such
as "coffee maker," "luggage," or the most dreaded item of all, "TV." But
choosing the right one is no easy task. Once you're actually in the store,
surrounded by options, it's easy to buy the worst brand of coffee maker, or
the luggage that is infamous for wearing out too soon, or the overly
expensive television set.

Wouldn't it be easier if you had some independent
help, right there in the store, to make the best choice and resist the often
bad information provided by salespeople?

Consumer Reports certainly thinks so. This week, it
introduced a cellphone application, ShopSmart, that allows you to carry the
magazine's famous product comparisons and ratings with you while shopping,
right on your mobile phone. Available for Verizon Wireless and Sprint Nextel
customers just in time for the holiday shopping season, this new service
costs $3.99 a month. Cingular will start carrying ShopSmart next month.

The idea is that, while you're in a store, dazed by
a row of similar-looking products like digital cameras, you can just whip
out your cellphone, launch ShopSmart, and see which camera Consumer Reports
recommends, or how it rates the particular camera you're holding.

We love and trust Consumer Reports, which runs a
very successful and useful paid Web site in addition to its legendary print
magazine. But we were dubious. How well would a cellphone handle such an
application? Would it be easy for last-minute shoppers to rapidly receive,
read and use the data provided by ShopSmart? So, we tested this new
application using a Verizon LG VX8100 cellphone -- a newer phone that runs
on Verizon's ultrafast EV-DO network, which downloads data at about the
speed of a low-end home DSL connection.

(Consumer Reports has a content-sharing
relationship with The Wall Street Journal Online.)

Overall, we were impressed by ShopSmart's
straightforward and easy-to-use approach. Each screen was simple to read at
a glance, and browsing from one screen to the next took just a couple of
seconds. We especially liked the program's ability to add certain products
to a "Favorites" list, for accessing later, and a feature that lets you
email the ShopSmart data to yourself, or anyone else, for later perusal.

There are a couple of downsides. For now, ShopSmart
covers only three categories of products -- electronics, appliances, and
home and garden. It omits important categories Consumer Reports covers in
print and online, including cars, personal finance, food and travel. So it
won't help you to buy that luggage, even though the magazine reviewed it.
And people who already subscribe to the magazine and/or the Web site don't
get it free. Like everyone else, they have to pay the $3.99 monthly fee.

Also, while performance was very good on our test
phone running on the fast EV-DO network, the product-information downloads
would be much, much slower at the typical network speeds most people use.

The program is updated weekly. It uses Yahoo
Shopping to provide up-to-date price ranges for each product, listing prices
from online stores as well as retail chains, so you can find where each
product is sold for the lowest cost.

After downloading ShopSmart through your phone
carrier's built-in online store -- our phone used Verizon's Get It Now -- it
can be opened by pressing just a few keys. This might be particularly useful
for shoppers who use this program only once in a while, so they don't easily
forget how to get started.

To make the best use of the phone's small display,
ShopSmart is simply organized into different sections using five tabs
labeled Ratings, Search, Favorites, Articles and About. The products
themselves are divided into three main categories: Appliances, Electronics,
and Home and Garden. Product types are listed alphabetically within each
category, 10 per screen. Under the Search tab, we found that the Appliances
category included 20 different types, starting with air conditioners and
ending with washing machines, including coffee makers and gas ranges along
the way.

Immediately contact all three
credit reporting agencies -- Equifax, Experian and
TransUnion -- and have them place a fraud alert on your
account. This means that companies issuing new credit
accounts in your name will have to call you to obtain
permission first. The alert will last for 90 days only.
You can extend the alert to seven years, but only if
you've been a victim of identity theft and can provide a
police report.

In addition to contacting the
credit reporting agencies, you should file a police
report if your property was stolen. Close any accounts
that you think may have been compromised by the loss or
theft. The FTC provides
more informationand a chart
to tick off steps you should take.

What can I do to
prevent myself from becoming a victim?

There isn't really anything you
can do to prevent identity theft. As long as Social
Security numbers are used for purposes other than Social
Security, you are at risk of having your identity stolen
any time someone has access to documents that carry your
number and other personal data. There are, however,
things you can do to lower your risk of becoming a
victim.

Request a free copy of
your credit report from a credit-reporting agency
once a year to examine it for fraudulent activity. A
new law requiring credit reporting agencies to
provide a free annual report goes into effect
nationwide in September. Until then, it's in effect
only in western and Midwestern states. The credit
report will show who requested access to your credit
record. Look for requests from companies you haven't
done business with and tell credit-reporting
agencies if you see credit accounts that you didn't
open or debts you didn't incur. Check to see that
your name and address are correct.

Don't give your Social
Security number to any business that doesn't really
need it.

Cross shred sensitive
documents. Thieves have been known to piece together
strips of paper that are shredded only once.
Cross-shredders double-shred documents.

Shred pre-approved
credit-card offers before tossing them in the
garbage.

Don't store sensitive
personal information, such as bank account numbers
and passwords, on home computers or handheld
devices.

Install a firewall and
anti-virus software on your computer and keep the
virus definitions up to date to prevent viruses and
Trojan horses from infecting your computer and
feeding personal information back to hackers.

Don't fall for phishing
scams. Phishing occurs when someone sends you an
e-mail purporting to be from your bank or other
company you do business with and requesting you to
update your account information.

Use specially designed
software programs to clean data from your computer
before you sell or discard it. Simply deleting files
will not remove data from the memory.

Don't carry any documents
in your wallet that have your Social Security number
on them, including your medical card or military ID,
on days when you don't need the card.

Opt-out when your bank or
other financial institution requests permission to
share information about you with other businesses.

Close all credit-card
accounts except the one or two that you really need.

If you are an identity
theft victim and live in one of ten states,
including California, Colorado, Louisiana, Maine,
Texas, Vermont or Washington, consider placing a
"freeze" on your credit report so that no one can
access it without your permission. More than 20
additional states are considering passing similar
legislation. Creditors need to look at your report
before granting you credit. By freezing your report,
it will prevent unauthorized people from seeing your
personal data and it will prevent creditors from
opening a new credit account in your name for an
impostor. Some states only let victims of identity
theft freeze their records. Other states allow
anyone to freeze their record. The State Public
Interest Research Groups maintains
a listof states with
freeze laws.

The Fraud Detectives
Consultant Network --- http://www.frauddetectives.com/This is a helpful site, although I
might add that accountants, attorneys, and others can list themselves free at
this site with no filtering with regard to skills and experience.

Occupational
fraud and abuse is a widespread problem that affects every entity,
regardless of size, location or industry. The ACFE has made it a
goal to better educate the public and anti-fraud professionals about
this threat.

The 2004
Report to the Nation is based on a survey that began in late
2003 and ran through the early months of 2004. Certified Fraud
Examiners throughout the US were asked to provide detailed
information on one fraud case he or she had personally investigated
that met the following criteria:

The case
involved occupational fraud;

The fraud
occurred within the last two years;

The
investigation of the fraud was complete; and

The CFE was
reasonably sure that the perpetrator had been identified.

The end result is a
comprehensive report that sheds light on occupational fraud and abuse while
offering stark lessons and valuable insights about its prevention and
detection.

Question
What should you do if you think you're a possible victim of ID theft?

Answer
There are a number of things to do, especially the following:
Fill out an identity theft report with your local, state or federal law
enforcement agency. It's unclear if the mere loss or theft of personal
information constitutes identity theft, but filing a report may offer additional
protections. The FTC makes an affidavit available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf

When your credit card is lost or stolen, first
notify your credit card company. You should always carry the 800 phone number
that appears on the back of you card in some location other than relying only on
the card for the phone number.

A new program being spearheaded by Microsoft Corp.
is designed to provide a trusted way for researchers to report stolen credit
card numbers and other data they've found in the dark corners of the
Internet.

Establishing that link is important because when a
researcher finds stolen data, it can be hard to convince a bank or another
affected institution that the data is legitimate. The lost time can mean the
difference between someone's identity being used for fraud, and stopping a
fraud before it occurs.

The program Microsoft is spearheading could greatly
help researchers deal with data they've found online and submitted to
affected companies, said Dan Clements, former president of CardCops, which
specializes in tracking down stolen payment card numbers online.

When researchers find card numbers being sold or
hawked online, "We send it to everybody immediately. We send it to
companies, the government, the consumer -- it's a blitzkrieg. That way they
have all the intel and can act accordingly," he said. "You could call it
scattershot. It's the only way you can assure that we've done our job. But
we have no way of knowing it's effective."

Clements said the speed of the new program -- how
quickly it leads to notifications for affected institutions and consumers --
will be key to whether it is successful.

Some merchants and gambling websites have tried
similar programs in the past. They created databases of stolen cards against
which they'd check transactions, Clements said. But the programs fell apart,
partly because the companies didn't work well together without a middleman,
he said.

The new program is being managed by the National
Cyber-Forensics & Training Alliance, a nonprofit organization focused on
cybercrime. Other participating organizations include the American Bankers
Association and eBay Inc.

More banks, retailers and Internet security firms
will be added as they sign up and are vetted by a third party.

Nancy Anderson, Microsoft's deputy general counsel,
said in an interview that the idea for the program came from problems
Microsoft security researchers encountered in their attempts to alert banks
and online retailers to fraud they've discovered.

"When these kinds of credentials are stolen, they
may not get used immediately, so the goal here is to get the information to
the institutions quickly, quickly, quickly, so the appropriate action can be
taken before the damage is done," she said.

Clements said that one weakness of Microsoft's
program is that it won't allow people to anonymously submit what they've
found, which could discourage whistleblowers from coming forward.

He cited an example from CardCops that involved an
insider at an e-commerce company who discovered his company was hacked and
lost 50,000 credit card numbers. The employee said management threatened to
fire him if he disclosed the breach. Clements said CardCops allowed the
employee to disclose the breach anonymously and sent the information to the
banks and the government.

Consumer advocates have some advice for the 26.5
million veterans whose personal information was stolen from the home of a
Veterans Affairs employee: Don't panic.

Identity theft may be a growing problem that
affected 9.3 million Americans last year, according to Javelin Strategy and
Research. But consumer advocates say a few precautions can lessen the
chances of becoming a victim, even for people whose personal information has
been stolen.

The first thing to do if you think your Social
Security number, birth date or other sensitive data has fallen into the
wrong hands is to place an initial fraud alert on your credit reports. There
are three major credit reporting agencies, but a call to one -- for
instance, Equifax at 800-525-6285 -- will ensure the other two are notified.

A fraud alert entitles you to a free copy of your
credit report from each of the three companies. Order one from each and
scrutinize them carefully for accounts you didn't open or debts you don't
recognize. Also, make sure that information such as your Social Security
number and employer are correct on each report.

If you discover accounts or transactions you didn't
authorize, call and speak with someone in the fraud department of each
company involved. Keep a log of each person contacted, along with the date,
time and topics discussed on each call.

An initial fraud alert also requires businesses to
take additional steps to confirm your identity before issuing loans or
opening accounts in your name. Be prepared for loan and credit card
applications to take slightly longer to be processed.

It's important to understand that an initial fraud
alert, as the name implies, is only a temporary fix. That's because it
remains in effect for only 90 days. To prevent becoming a victim after the
three months are up, you'll need to take additional steps.

Next, fill out an identity theft report with your
local, state or federal law enforcement agency. It's unclear if the mere
loss or theft of personal information constitutes identity theft, but filing
a report may offer additional protections. The FTC makes an affidavit
available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf

Ask each of the three credit reporting companies to
place a freeze or extended alert on your account. Seventeen states have
enacted laws that require the reporting companies to block access to your
files in most instances. Check with the Consumers Union Web site or attorney
general in your state to see if this is available where you live.

Even if your state doesn't offer this protection,
ask Equifax, TransUnion and Experian to give you an extended alert anyway.
This option will entitle you to two free credit reports per year, and it
will also require the credit reporting companies to remove you from lists
marketers use to send prescreened credit offers for five years.

To qualify for an extended alert, the reporting
companies will require you to prove you've been the victim of identity
theft, even though it is not always clear how the law defines a victim in
this case. Be sure to include the FTC affidavit or other law enforcement
report you filed. It is legal documentation that your personal
identification has been stolen.

Finally, recognize that safeguarding your privacy
is a never-ending task, even for people who have no reason to believe their
personal information has been stolen. A little education and prevention, say
consumer advocates, can go a long way.

''You need an ongoing vigilance,'' says Paul
Stephens, a policy analyst with the Privacy Rights Clearinghouse in San
Diego. ''We want people to be proactive, to be vigilant, but we also don't
want to have people panicking.''

Organizations and government agencies featured in this section are listed
alphabetically.

Better Business Bureau Online
The Better Business Bureau Online, the electronic arm of the Better Business
Bureau, offers consumers the opportunity to file a complaint against
e-commerce sites as well as offline businesses. The Better Business Bureau
was founded in 1912 and seeks to create a more fair marketplace through
consumer education and voluntary self-regulation on the part of companies.
http://www.bbbonline.org/consumer/complaint.asp

Consumer Sentinel
Consumer Sentinel is a complaint database designed to provide law
enforcement agencies with information on Internet cons, telemarketing scams
and other consumer fraud-related complaints. The database, which is
maintained by the Federal Trade Commission, is available to 40 federal law
enforcement organizations, more than 200 state and local fraud-fighting
agencies, and every state attorney general in the United States. You may
register a complaint
here.
http://www.consumer.gov/sentinel/index.html

econsumer.gov
This international site, launched by a coalition of 13 nations, registers
cross-border e-commerce complaints and offers tips for safe shopping online.
It utilizes the Consumer Sentinel's network of Internet fraud complaint data
and shares it in several languages with consumer protection law enforcers in
countries that belong to the International Marketing Supervision Network.
http://www.econsumer.gov

Internet Fraud Complaint Center
The Internet Fraud Complaint Center enables consumers to log online fraud
complaints. The center is the result of a partnership between the FBI and
the National White Collar Crime Center (NW3C), a nationwide support network
for enforcement agencies involved in the prevention, investigation, and
prosecution of economic and high-tech crime. NW3C is funded through a grant
from the Bureau of Justice Assistance, Office of Justice Programs, and the
U.S. Department of Justice.
http://www.ic3.gov/default.aspx

National Fraud Information Center
The National Fraud Information Center (NFIC) was established in 1992 by the
National Consumers League and continues to be funded by the organization.
NFIC offers an online form for consumers who are interested in registering
an Internet fraud complaint.http://www.fraud.org/

State Attorneys General
Contact your state attorney general if you feel you have been a victim of
consumer fraud on the Web. Consult individual state sites for telephone or
electronic contact information for filing complaints. U.S. Securities and
Exchange Commission The U.S. Securities and Exchange Commission offers tips
on avoiding Internet fraud when investing, and a mechanism to register
Internet fraud or spam complaints for investigation.
http://www.naag.org/ag/full_ag_table.php

The Securities and Exchange Commission says it
has set aside about $450 million for payments to outside whistleblowers
whose information results in successful cases and penalties collected
from companies or individuals.

The SEC set up the program in accordance with
the financial overhaul law enacted in July. It follows intense public
criticism of the agency for the breakdown that allowed Bernard Madoff's
multibillion-dollar fraud to go undetected for 16 years, despite
numerous red flags raised by whistleblowers.

A report issued Friday by the SEC shows it has
put $451.9 million into a new fund to pay whistleblowers, which must
have a minimum $300 million.

The Securities and Exchange Commission says it
has set aside about $450 million for payments to outside whistleblowers
whose information results in successful cases and penalties collected
from companies or individuals.

The SEC set up the program in accordance with
the financial overhaul law enacted in July. It follows intense public
criticism of the agency for the breakdown that allowed Bernard Madoff's
multibillion-dollar fraud to go undetected for 16 years, despite
numerous red flags raised by whistleblowers.

A report issued Friday by the SEC shows it has
put $451.9 million into a new fund to pay whistleblowers, which must
have a minimum $300 million.

Dirty Tricks Played on Job SeekersJob hunters using Monster.com, the employment Web site
owned by Monster Worldwide, received fake job offers by e-mail that asks for
their Bank of America account information. The e-mail contains personal
information collected when hackers tricked Monster.com customers into
downloading a virus in a fake job-seeking tool, according to researchers at
Symantec, the world's biggest maker of security software.
Rochelle Garner, "Monster.com Users Get Fake Offers And Request," The
Washington Post, August 23, 2007, Page D04 ---
Click Here

Yeah, these "phishing" scams have netted crocks
over $2.8 billion this past year according to an article I read recently. I
thought the number sounded high, but they are bombarding people with genuine
looking requests from PayPal and Amazon.com saying that your account has
been restricted, charged for something you didn't buy, or is being
investigated for account tampering by their security staff. A lot of people
panic apparently when they see this stuff and reply with personal account
information. I feel sorry for them so every time I get one for PayPal I
reply by sending it to
spoof@paypal.comand they supposedly
investigate them. If anyone has a similar email address for Amazon, please
let us know. Just using Amazon's customer service form is not enough. The
whole message has to be forwarded to them, so they can investigate the
source of the illegal message.

John Schatzel

November 14, 2006

Snopes has a pretty good page for identifying phishing spoofs. Enter "phishing"
into the search box at
http://www.snopes.com/

Experienced eBay users swear by it, as one has more
recourse in the event of problems.

An experienced friend also tell me that it's a good
idea to open a new bank account specifically for PayPal purposes. The reason
is that you can move newly deposited funds to an account beyond PayPal's
reach. I'm told this prevents PayPal from sequestering your funds in the
event of a late protest by the source of the funds.

The Fraud Detectives
Consultant Network --- http://www.frauddetectives.com/
This is a helpful site, although I
might add that accountants, attorneys, and others can list themselves free at
this site with no filtering with regard to skills and experience.

Warning to retirees: Beware of your familiesFinancial swindles are one of the fastest-growing forms
of elder abuse. By some estimates, as many as five million senior citizens are
victimized each year, says Sara Aravanis, director of the nonprofit National
Center on Elder Abuse, which provides information to federal and state policy
makers. Because of the problem's spread, "many states have laws authorizing
financial institutions to report suspicions of elderly abuse," says Bruce Jay
Baker, general counsel for the Illinois Bankers Association. Earlier this
summer, the Securities and Exchange Commission hosted a Seniors Summit to
highlight the issue, with SEC Chairman Christopher Cox noting that protecting
seniors' pocketbooks "is one of the most important issues of our time."
Jeff D. Opdyke, "Intimate Betrayal: When the Elderly Are Robbed by Their Family
Members," The Wall Street Journal, August 30, 2006; Page D1 ---
http://online.wsj.com/article/SB115689331870748918.html?mod=todays_us_personal_journal

In all cases, please provide as much detail as
possible concerning the who, when, where, what, how and how much. You do not
need to provide your name. The information you submit will be entered over a
secure connection. All information submitted is safeguarded against
unauthorized disclosure.

KnowFRAUD?Take A
Short Quiz just for fun to test your knowledge of fraud.

Comment from Bob
JensenThis is a helpful site, although I
might add that accountants, attorneys, and others can list themselves free at
this site with no filtering with regard to skills and experience.

Title Washing: How Car Titles Get Laundered
Unsuspectingly you may be purchasing a car that was flooded during a hurricaneThousands of vehicles that sat in the murky waters
left by hurricanes Katrina and Rita are starting to show up on the used-car
market. Most states require that flooded cars be labeled as such on the title.
But scam artists have found loopholes in the system. They re-register cars in
states with looser title laws -- sometimes two or three states -- until the
warning that the car was flooded is gone. This fraudulent practice is known as
"title washing."
Jeff Brady, "Holes in Monitoring System Let Lemons Get Resold," NPR,
January 31, 2006 ---
http://www.npr.org/templates/story/story.php?storyId=5173717

Americans lost at least $548 million to identity
theft and consumer fraud last year as the Internet provided new victims for
age-old scams, according to government statistics released Tuesday.

The U.S. Federal Trade Commission said it received
635,000 consumer complaints in 2004 as criminals sold nonexistent products
through online auction sites like eBay Inc. or went shopping with stolen
credit cards

Identity theft -- the practice of running up bills or
committing crimes in someone else's name -- topped the list with 247,000
complaints, up 15 percent from the previous year.

Fraud and identity theft cost consumers at least $437
million in 2003.

Internet-related fraud accounted for more than half
of the remaining complaints as scammers found victims through Web sites or
unsolicited e-mail, the FTC said.

Auction fraud was the most common Internet scam, the
FTC said in its annual fraud report, followed by complaints about online
shopping and Internet access service.

The number of incidents was up across nearly every
category from 2003, but it was unclear whether that represented an actual
increase in fraud or simply a greater awareness of the FTC's Consumer Sentinel
fraud program.

Consumers likely lost significantly more than the
amount reported, as fewer than half were able to pin a dollar figure on their
losses.

The median monetary loss reported was $259, though 41
consumers reported losses of $1 million or more.

The FTC did not specify how many identity-theft
incidents took place online. A recent report by the Better Business Bureau
found that most cases of identity theft occurred through the theft of a
checkbook or other offline methods.

Question
What should you do if you think you're a possible victim of ID theft?

Answer
There are a number of things to do, especially the following:
Fill out an identity theft report with your local, state or federal law
enforcement agency. It's unclear if the mere loss or theft of personal
information constitutes identity theft, but filing a report may offer additional
protections. The FTC makes an affidavit available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf

Consumer advocates have some advice for the 26.5
million veterans whose personal information was stolen from the home of a
Veterans Affairs employee: Don't panic.

Identity theft may be a growing problem that
affected 9.3 million Americans last year, according to Javelin Strategy and
Research. But consumer advocates say a few precautions can lessen the
chances of becoming a victim, even for people whose personal information has
been stolen.

The first thing to do if you think your Social
Security number, birth date or other sensitive data has fallen into the
wrong hands is to place an initial fraud alert on your credit reports. There
are three major credit reporting agencies, but a call to one -- for
instance, Equifax at 800-525-6285 -- will ensure the other two are notified.

A fraud alert entitles you to a free copy of your
credit report from each of the three companies. Order one from each and
scrutinize them carefully for accounts you didn't open or debts you don't
recognize. Also, make sure that information such as your Social Security
number and employer are correct on each report.

If you discover accounts or transactions you didn't
authorize, call and speak with someone in the fraud department of each
company involved. Keep a log of each person contacted, along with the date,
time and topics discussed on each call.

An initial fraud alert also requires businesses to
take additional steps to confirm your identity before issuing loans or
opening accounts in your name. Be prepared for loan and credit card
applications to take slightly longer to be processed.

It's important to understand that an initial fraud
alert, as the name implies, is only a temporary fix. That's because it
remains in effect for only 90 days. To prevent becoming a victim after the
three months are up, you'll need to take additional steps.

Next, fill out an identity theft report with your
local, state or federal law enforcement agency. It's unclear if the mere
loss or theft of personal information constitutes identity theft, but filing
a report may offer additional protections. The FTC makes an affidavit
available at
http://www.consumer.gov/idtheft/pdf/affidavit.pdf

Ask each of the three credit reporting companies to
place a freeze or extended alert on your account. Seventeen states have
enacted laws that require the reporting companies to block access to your
files in most instances. Check with the Consumers Union Web site or attorney
general in your state to see if this is available where you live.

Even if your state doesn't offer this protection,
ask Equifax, TransUnion and Experian to give you an extended alert anyway.
This option will entitle you to two free credit reports per year, and it
will also require the credit reporting companies to remove you from lists
marketers use to send prescreened credit offers for five years.

To qualify for an extended alert, the reporting
companies will require you to prove you've been the victim of identity
theft, even though it is not always clear how the law defines a victim in
this case. Be sure to include the FTC affidavit or other law enforcement
report you filed. It is legal documentation that your personal
identification has been stolen.

Finally, recognize that safeguarding your privacy
is a never-ending task, even for people who have no reason to believe their
personal information has been stolen. A little education and prevention, say
consumer advocates, can go a long way.

''You need an ongoing vigilance,'' says Paul
Stephens, a policy analyst with the Privacy Rights Clearinghouse in San
Diego. ''We want people to be proactive, to be vigilant, but we also don't
want to have people panicking.''

I am really glad to see the Digital Duo return to PBS television.
Back in the 1990s I loved this show as a helper to those of us struggling to
learn new computing and networking technologies. The most important
attribute of this show is the willingness of the Duo to criticize the products
or services that they are evaluating. The Duo is consumer-oriented.
Unlike its counterpart Computer Chronicles, the Digital Duo are probably not
especially popular among vendors who supply the products and services.

The main site for the Digital Duo
http://www.pcworld.com/digitalduo/index/0,00.asp
The Digital Duo is the independent, irreverent video
review of all things digital. Hosted by Stephen Manes and Angela Gunn.
More about PC
World's Digital Duo
The weekly shows are probably listed in your television guide for your local PBS
channel. I suggest you record each show and then
save the recordings that you think will be helpful to your students or your
family in the future.

One of the features that I watched this weekend featured free access to
credit reports. The Duo pointed out how the majority of the sites that now
offer free credit reports should be avoided. They recommended using
https://www.annualcreditreport.com/cra/index.jsp
I think this is good advice, but I have some other recommendations below.

Online Education for Managerswww.bettermanagement.comCPAs and business managers can brush up on the basics of fraud
as well as learn detection and prevention strategies from articles and case
studies at this Web site. Titles include “Business Intelligence in the
Financial Services Industry.” Fraud investigators can explore the library
section to read related content on money laundering, regulatory compliance and
risk management and also “solve business problems” with
anti-money-laundering and financial services solutions.

Fraud or Frivolity?www.stockfraudlawyersnetwork.comCPAs acting as financial consultants will want to visit this
e-stop to find out about broker misconduct and what distinguishes a securities
fraud case from a frivolous claim. Users also can locate a securities fraud
lawyer in their area and get a free consultation.

Fraud Is…alextalksbusiness.comAlex Kwechansky, public speaker and author of the book Never
Underestimate Who Can Cheat You, gives users a better understanding of
fraud in publicly and privately owned companies and how to spot and,
hopefully, thwart it at this Web site. The section Dirty Deeds defines
different fraud concepts including embezzlement, insider trading and skimming,
while the section Here’s the Point outlines some of fraud’s early warning
signs.

Insure Against Fraudwww.insurancefraud.orgCPAs looking to advise clients on insurance fraud will find
legislative news, the Fraud Case of the Month and the Fraud Hall of Shame at
this Web site, first listed as a Smart Stop in April 2002 in response to
fraudulent 9/11 claims. Visitors to the Coalition Against Insurance Fraud’s
Web stop also can receive a free sample of Insurance Fraud Weekly ePort.

We have designed our toll free reporting
service specifically to provide employees an anonymous communication channel
to bring forth Code of Conduct concerns and establish a protected platform for
on-going communications with your company.

Code Orange: CyberCrime Center --- http://www.eweek.com/article2/0,3959,1104230,00.asp
It's gotten so bad that even the feds are worried. So the Department of Homeland
Security plans on opening a Cyber-Security Center in DC to address the problem.
We're not just talking about nabbing script-kiddies, either—big-time criminals
are flocking to the Web. But one key piece is missing—and our experts think
the new center will flop until it's addressed. Find out what the fatal flaw is
and learn details of this new government bureaucracy in our special coverage.

How to Blow the Whistle at Trinity University
Until I recently ran into Gary Tanner, Trinity University's head of internal
auditing, I was not aware that Trinity had a fraud hotline for anonymous
(although it does not have to be anonymous) reporting suspected frauds, sexual
abuse, or other bad things that happen on campus. Scroll down to the
"Fraud Hotline" button at http://www.trinity.edu/gtanner/

If you don't have an immediate need for this hotline button, I suggest you
scroll back to the top of
Gary
's page just to smile at the really cute animation of the Trinity Tiger spotting
his tail and then commencing to chase the tail. Of course
Gary
never runs around in circles like that.

February 24, 2004 reply from Bill Spinks

Being curious, I went to the website and our
"community" might find this statement interesting:

The management of Trinity University does have the
right to review any and all university computer activities including e-mail,
key strokes and uses that do not coincide with the mission of Trinity
University. (emphasis mine)

So remember when you type those "key
strokes" you are not alone. Big Northrup loves you and watches overyou.... ................

Class Action Securities Fraud Lawsuits up in
2004
While the number of federal securities fraud class actions filed in 2004
increased only moderately from 2003 levels, rising to 212 companies sued from
181, the decline in stock market capitalization corresponding to these actions
increased dramatically, according to a report released today by the Stanford
Law School Securities Class Action Clearinghouse in cooperation with
Cornerstone Research. The total decline in the market capitalization of
the defendant firms from the trading day just before the end of the class
period to the trading day immediately after the end of the class period, or
the "Disclosure Dollar Loss (DDL)," nearly tripled from $58 billion
in 2003 to $169 billion for cases filed in 2004. This 192 percent increase in
the DDL index is attributable entirely to eight filings, in which each
defendant firm experienced disclosure dollar losses in excess of $5 billion.
In sharp contrast, there was only one filing with losses that large in all of
2003.AccountingWeb, January 6, 2005 --- http://www.accountingweb.com/cgi-bin/item.cgi?id=100321

Questions
What do airline fares and Congressional legislation have in common?

Answer
There are a lot of surprises that are revealed only after you're struck with the
deceptions (especially about baggage fees in both instances).
What you end up with is not necessarily what you'd planned on getting.

In 2009 the airline seat demand is expected to drop off
a cliff for a variety of reasons, not the least of which is the economy.
Beware of increasingly deceptive ticket deals.

Travel companies say that by
the end of this year, consumers will be able to comparison shop for airfares
that for the first time will include the fees airlines have been tacking on to
advertised fares only after you hit the "buy" button. AlreadyTripAdvisor.com and
FlyingFees.comoffer elementary tools for calculating fees, and advanced
technology that can fold fees into fare quotes at travel agencies, online
vendors and airline Web sites is likely to hit the market later this year.
"Airfare Quotes That Lay Bare Hidden Fees: Sites Build Tools to Compare
the Actual Costs of Flights; When Baggage Tips the Scale," by Scott Macartney,
The Wall Street Journal, March 10, 2009 ---
http://online.wsj.com/article/SB123664662318478683.html?mod=todays_us_personal_journal

Shop for airline tickets online or through a travel
agent and the price quotes you get don't tell the whole story these days.
But that's about to change.

Travel companies say that by the end of this year,
consumers will be able to comparison shop for airfares that for the first
time will include the fees airlines have been tacking on to advertised fares
only after you hit the "buy" button. Already TripAdvisor.com and
FlyingFees.com offer elementary tools for calculating fees, and advanced
technology that can fold fees into fare quotes at travel agencies, online
vendors and airline Web sites is likely to hit the market later this year.

"This has tremendous
potential to turn air-travel shopping on its end," said Kyle Moore, vice
president of product marketing for Sabre Travel Network.

A $200 ticket on one airline
may look like a good deal, but could ultimately be more expensive than a
$250 ticket on another carrier if that first airline charges fees for
checking baggage, transporting pets or unaccompanied minors. Even perks like
seats with extra legroom, priority security-line privileges or one-day
passes to an airport lounge can significantly boost the price of a ticket.

Airlines have found customers willing to pay more at the airport when fees are separate from fares. Folding fees into fares could limit airlines' ability to dig deeper into traveler wallets.

Sabre Holdings Corp. and Amadeus IT Group SA, two leading airline booking companies, say they'll have tools out to travel agents, Web sites and airlines beginning later this year that will add fees consumers plan to use into ticket prices, showing bottom-line prices much as car-rental companies were pressured into showing the total price of a rental with all fees, taxes and surcharges included.

Rough early attempts to fold fees into prices give travelers a better idea of the fees they may incur, but still leave a lot of the math to travelers. TripAdvisor, a company owned by Expedia Inc. that built a following collecting travelers' hotel and destination reviews, added airline ticket search capabilities to its site on Feb. 27 and unveiled a "fee estimator" that can re-rank prices based on how many bags you plan to check. The fee estimator, developed in-house by TripAdvisor, can also calculate expected fees for each flight for meals, drinks, snacks and

"Customers are looking for
clarity in pricing," says Bryan Saltzburg, general manager of new
initiatives for TripAdvisor.

Without fees, a
$193 round-trip fare between New York and Fort Lauderdale for travel later
this month on US Airways Group Inc. looks cheaper than a $197 fare at
JetBlue Airways Corp., for example. But if you're checking two bags, you'll
pay $80 in fees on US Airways and only $40 on JetBlue.

The fee estimator takes into account whether you
have elite status at an airline that may exempt you from some fees. But
there are lots of limitations. TripAdvisor's estimator only works for
domestic flights and does not price out the costs of overweight or oversized
luggage, priority seating, pets, unaccompanied minors or other charges.
TripAdvisor says it concentrated on the most frequently incurred fees; more
fees may be coming.

Jensen Comment
Add-on fee collecting greatly complicates product costing since most of these
fees are in essence for separate products. But the products are in no way
independent since the all depend on the purchase of the main ticket. Also these
products share many common fixed costs such as the cost of baggage handling. The
airline needs a baggage system to serve both the "free baggage" that is part of
the ticket price and the "fee baggage" that is charged baggage not covered in
the price of a ticket. Cost accounting and pricing decisions are very
complicated and offer an opportunity for new case studies in cost and managerial
courses. Add this to the problem of frequent flier liabilities and you may write
up a case that nobody can solve. Those incomprehensible telephone bills
demonstrated that consumers really hate complicated billings with lots of hidden
surprises in the fine print.

The first list reflects the most called or inquired about industries. The
second lists the industries which received the most complaints during the
year.

Top Ten Inquiries

1. Home Improvement Contractors

2. Mortgage Companies/Brokers

3. Residential Roofing Contractors

4. Residential Heating & A/C Companies

5. Window Companies

6. Home Builders

7. Plumbing Contractors

8. Franchised Car Dealers

9. Tree Cutting/Trimming Companies

10. Charities

Top Ten Complaints

1. Mortgage Companies/Brokers

2. Home Improvement Contractors

3. Franchised Car Dealers

4. Credit Card Offers & Plans

5. Financial Services

6. Residential Roofing Contractors

7. Residential Heating & A/C Companies

8. Tree Cutting/Trimming Companies

9. Home Furnishing Stores

10. Work-At-Home Offers

Auto Repair - Mechanical

Financial services is new to the top ten lists with a dramatic 900% increase
in complaints. The 90 complaints in this industry can all be contributed to one
company in our service area, which does business nationwide. The complaints
against this company concern a wide variety of issues, including advertising,
sales, delivery, repair or service, guarantee or warranty, product quality,
refund or exchange, contract, customer service and credit or billing issues.
Donna Childs, CAE, BBB President & CEO, says, "It is vital that
consumers read contracts and ask questions. If you don't know what something
means, ask for clarification. And, always read the fine print."

Mortgage companies and brokers continue to be high on both lists. This can be
contributed to the fact that interest rates are still attractive. The 36%
increase in inquiries on companies in this industry is due to consumers checking
around to find reputable companies to do business with. Unfortunately,
complaints are up 50% in this industry also. This increase may be attributed to
a high demand in this industry. Companies are having a difficult time keeping up
with the volume of business.

The home improvement industry and related industries like heating & A/C,
windows, plumbers and roofing contractors continue to be among the most
complained and inquiried about industries. Though they are still on the top ten
lists, some of these industries have seen a decrease in activity. Donna Childs
says, "Roofing contractors have seen a 29% decrease in the number of
complaints filed in their industry and a 33% decrease in the number of
inquiries. This can be attributed to the fact that the majority of roofing jobs
generated from the 2001 hail storms have been completed and the activity in this
industry is falling back to normal levels."

Work-at-home offers were new to the top ten complaint list. Again, this was
due to one company operating in our service area. The company involved has a
pattern of unanswered complaints concerning unfulfilled contracts, selling
practices and advertising practices.

Donna Childs says, “Ads promoting assembly work, chain letters, envelope
stuffing, multi-level marketing, online business and medical insurance claims
processing are tempting, but many people are victimized by work-at-home schemes
like these and are losing more money than ever. In fact, the Federal Trade
Commission reports work-at-home schemes were one of the top ten consumer frauds
that it received complaints about in 2002." She continues, "It’s
important to keep in mind that any work-at-home offer requiring an upfront fee
or purchase is probably not legitimate. If you send money to one of these, you
will probably never see your money again or earn money by working at home.
Avoiding work-at-home opportunities is the easiest way to save your money. But,
if you are considering an offer, investigate before you commit or pay fees. Ask
questions and get ten references from people successful in the venture in your
area. Don’t feel pressured to make a decision."

Also new to the lists are tree cutting and trimming companies and home
furnishing stores. Complaints against tree cutters and trimmers varies from
missed appointments, incomplete work and failure to call customers back. Donna
Childs says, "One of the common complaints the BBB hears involves stump
removal. One of these contractors may cut down a tree in a yard and promise to
come back and take out the stump. Time goes by, call after unreturned call, the
stump is still in the yard, leaving a frustrated consumer."

Home furnishing stores complaints involve warranty issues. For example, a
customer has a couch delivered and the customer notices it is ripped upon
arrival. The customer is upset because instead of replacing the couch the
company sends someone out to fix it. This action may be covered by the warranty,
but the consumer is upset because they wanted a new couch, not one that has been
repaired.

Donna concludes, “The bottomline is you need to know who you are doing
business with. So, before you do business with a stranger, check with a
friend…your Better Business Bureau." Put the BBB to work for you by
visiting www.dayton.bbb.org or calling
(937) 222-5825 or (800) 776-5301, 24/7.

Additional information about the industries on the Better Business Bureau's
top ten follows.

Better Business Bureau Top Ten Inquiry List

2003 Ranking

Number Of Inquiries
In 2003

2002 Ranking

Increase (Decrease)
Over 2002 Numbers

1. Home Improvement Contractors

8,975

2

(1%)

2. Financial - Mortgage Companies/Brokers

7,420

4

36%

3. Roofing - Residential Contractors

7,068

1

(33%)

4. Heating & A/C - Residential - Install/Service

5,746

3

5%

5. Windows - Installation/Service

4,417

5

27%

6. Home Builders/Contractors

3,109

6

6%

7. Charities

2,622

8

20%

8. Auto Dealers - Franchised - New & Used

2,431

10

21%

9. Garden/Lawn-Tree Cutting/Trimming

2,349

NEW

22%

10. Charities

2,320

7

5%

Better Business Bureau Top Ten Complaint List

2003 Ranking

Number Of Complaints
In 2003

2002 Ranking

Increase (Decrease)
Over 2002 Numbers

1. Financial - Mortgage Companies/Brokers

117

5

50%

2. Home Improvement Contractors

110

2

12%

3. Auto Dealers - Franchised - New & Used

102

4

19%

4. Credit Card - Offers/Plans

91

3

(4%)

5. Financial Services

90

NEW

900%

6. Roofing - Residential Contractors

83

1

(29%)

7. Heating & A/C - Residential - Install/Service

61

6

39%

8. Garden/Lawn-Tree Cutting/Trimming

57

NEW

63%

9. Home Furnishing Stores

53

NEW

51%

10. Work-At-Home Offers

44

NEW

193%

Auto Repair -
Mechanical

44

9

16%

2003

2002

Increase (Decrease)
Over 2002 Numbers

Instances of Service

314,624

232,456

35%

Total Complaints

2,876

2,808

2%

The Better Business Bureau of Dayton/Miami Valley, Inc. is a private,
nonprofit association founded in 1925. The Bureau serves the Miami Valley,
including Montgomery, Greene, Clark, Darke, Miami, Preble, Shelby and northern
Warren Counties.

Scam WarningDenny Beresford sent me a message about the latest
Social Security email scam. Always remember that government agencies like the
IRS and the Social Security Administration, along with banks credit unions, do
not send you email messages out of the blue seeking your privacy information or
your money. These messages come from crooks, most of whom reside outside the
legal jurisdiction of the United States. I don't even open email messages from
these institutions.

I'm receiving social security benefits now and I
have to say that the email I received earlier this morning looked fairly
official. However, it seemed unlikely that Social Security would make such a
notification by email. So I found the announcement on the official Social
Security site. While I'd bet that most people don't fall for the "wife of
the former president of Nigeria" type of scam, this looks like one that
might have a higher degree of success.

It's mind boggling that anyone would believe that
someone they don't know would share millions of dollars with them for
helping transfer out (mostly stolen) money from wherever. Does anyone on
this list know of any good psychological studies on this phenomenon? It
would be fascinating to understand it better.

It's been a few years, but my only two personal
experiences with these scam letters came close together.

One was a call from a woman wanting to know how
much income tax she would owe if she was paid $6M to arrange a funds
transfer. I only had one contact with that person. The other call was from a
former client who was in desperate financial straits over an illness in his
family, after several conversations and showing him the results of research
I convinced him it wasn't a real offer.

The thing that was common to both situations was
that the people were in desperate need, so they were willing believers. It's
something like the lottery mentality - where they think there is one big
deal, a home run play, that will fix everything that is wrong.

If there were a study on this kind of thing, I
think it would include mention of suspension of disbelief.

It's especially enlightening when the victims turn the tables on the
scammers. The huge underlying reason why these schemes are successful is
that far too many people are willing to bend ethics one time when the
promised payoff is enormous.

When I was at FSU I raised horses. Across the road at the time were
100,000 undeveloped acres (mostly pine forest) where occasional drug deals
were made --- at least I assumed so since the setting was so perfect for
privacy. I used to ride horseback for miles on dirt roads through those
woods wondering (actually daydreaming) what I would do if I stumbled on two
drug dealers who killed each other and left a million dollars of cash laying
there for the taking.

It would be tempting to load up my saddlebags before returning to the
barn to report the shootings. (In those days there were no cell phones such
that I could not phone in the crime until I returned to the barn).

Can't say whether it was good news or bad news that I never encountered
such an opportunity in real life. Hypothetically I insist that I would take
the high road! That's the beauty of fiction!

Bob Jensen

The holiday season brings out more scam artists from all over the world
This is an interesting set of links from the Federal Trade Commission

Jensen Comment
Even the familiar Nigerian-type scams are still enormously successful. These
scams are the second most lucrative export (oil is number one) from Nigeria, and
Nigeria is only one of many places in the world where such scams originate. Many
also come from Eastern Europe where technology geniuses are always miles ahead
of law enforcement and vendor security protection upgrades ---
http://www.trinity.edu/rjensen/FraudReporting.htm#NigerianFraud

Beware of Counterfeit U.S. Postal Money OrdersIn the last six months, the F.B.I. and postal
inspectors say, international forgers - mostly in Nigeria, but also in Ghana and
Eastern Europe - appear to have turned new attention to the United States postal
money order. More than 3,700 counterfeit postal money orders were intercepted
from October to December, exceeding the total for the previous 12 months,
according to postal inspectors. Moreover, 160 arrests have been made in the
United States since October in cases where people have been suspected of
knowingly receiving fraudulent postal money orders or trying to cash them, Paul
Krenn, a spokesman for the United States Postal Inspection Service, said.
Tom Zeller Jr., "Authorities Note Surge in Online Fraud Involving Money Orders,"
The New York Times, April 26, 2005 ---
http://www.nytimes.com/2005/04/26/business/26forgery.html?

When I visited Fe-International.com -- the
investment site Johannes mentioned -- the toolbar popped up a warning:

"The page you are trying to visit has been blocked
by the Netcraft Toolbar because it is believed to be part of a fraudulent
phishing network. Do you still want to go there?"

I clicked "Yes" because I wanted to poke around
some more (for the record, unless you really know what you're doing, it is
best just to avoid known or suspected scam sites altogether.) Netcraft dug
up a bunch of information on the site, including records indicating that the
site domain name was associated with a host named "got.raped.org." (Nice
touch, I thought. Gee, no, that's not phishy at all.)

With a few hours of research, I soon discovered
that there are literally hundreds if not thousands of these sites online at
any given time, advertising high-yield investment plans (HYIPs) that claim
to offer quick profits through a variety of poorly explained methods usually
related to day-trading or buying foreign currencies or stocks.

The advertised rate of return varies by site, but
the rates offered usually are far in excess of what most legitimate
investment vehicles offer, promising anywhere from 1 to 2 percent per day to
130 percent over 30 days.

I suppose it's possible some of these sites are
legit, but it appears that most are little more than old-fashioned Ponzi
schemes gone virtual. The funds may pay out in the beginning, but eventually
they will attract more investors than they can reasonably pay off with the
money they're taking in. When that happens, the fund inevitably closes down
and lots of investors are left without anything.

All of the funds require investors to make their
deposits via some type of virtual gold-backed currency like eGold or
E-Bullion. Such payment methods are largely outside the control of U.S.
financial regulators and are "non-repudiable," meaning once money has been
sent there is no way to reverse the transaction.

Most of the sites allow people to invest anywhere
from $1 to $10,000, with claims of "guaranteed payouts." But from browsing
one of many HYIP forums dedicated to tracking the lifespan and performance
of these high-risk investments, it seems the majority pay back only a
fraction of what people pay into them.

You write that check
to your favorite charity, send it off and feel pretty good about your
philanthropic gesture, right? Federal and state regulators are taking steps to
make sure that tax-deductible donation is being used properly by the nonprofit
receiving it. Following the firestorm that erupted in corporate America in the
wake of numerous accounting scandals, some are wondering if enough is being
done to regulate the nonprofit sector, with Massachusetts Attorney General
Thomas F. Reilly leading the charge.

"We are seeing
more mischief in this area than I think we've seen before," Reilly told
the New York Times. He is calling for legislation in his state to tighten
controls over charities.

New York Attorney
General Eliot Spitzer proposed a series of laws to tighten up regulation of
the nonprofit sector last summer, but the bills have stalled in the
legislature. "When his efforts didn't go anywhere, I think some charities
decided it was just a fad," Michael W. Peregrine, a lawyer in Chicago who
represents many nonprofit groups, told the Times. "But the confluence of
high-profile, notorious developments among charities is giving these attorneys
general and congressmen the ammunition they need to push these measures
through."

Senator Charles E.
Grassley (R-IA), chairs the Senate Finance Committee and told the Times his
committee’s staff would be looking at charitable issues "over a long
period of time." He added that there may be hearing held in the matter,
which the charities had hoped wouldn’t be necessary.

"In Congress, we
legislate so much and delegate, but we need to do more oversight to make sure
checks and balances work and supervise the tax credits we're giving,"
Grassley told the Times. "We give tax deductions for charitable giving,
so there's a public policy interest in how the money gets used."

Rep. Bill Thomas
(R-CA), chairman of the Ways and Means Committee, sent shock waves through the
nonprofit sector earlier this month when he said his committee would be
questioning the benefit taxpayers receive when a hospital or credit union is
nonprofit as opposed to for-profit.

"They're in
direct competition with institutions that pay taxes, and what is the good and
worthy cause for which they were given the nonprofit, therefore tax-preferred,
status?" he asked, referring to credit unions in a speech to the
Federation of American Hospitals, reported by the Times. "I think some of
it's gotten murky or lost in their attempt to build and grow and provide
services to the point that if I put one down on paper and said profit or
nonprofit, you couldn't tell the difference."

FBI: Don’t be Fooled by Work-at-Home Scams The FBI and the Internet Crime Complaint Center
(IC3) continue to receive numerous complaints from individuals who have fallen
victim to work-at-home scams and remind consumers to be vigilant when seeking
employment online. These work-at-home schemes are designed by criminals to gain
the trust of job seekers in order to take advantage of working relationships to
further illegal activity. Most victims do not even realize they are engaging in
criminal behavior until it is too late. In many of the reported scams, victims
are often hired to “process payments,” “transfer funds,” or “reship products.”
However, these scams exploit unwitting employees by having them cash fraudulent
checks, transfer illegally obtained funds for the criminals, or receive stolen
merchandise and ship it to the criminals. Other scams entice victims to sign up
to be a “mystery shopper,” receiving fraudulent checks with instructions to cash
the checks and wire the funds to “test” a company’s services. Victims are told
they will be compensated with a portion of the merchandise or funds. Free Republic, February 4, 2009 ---
http://www.freerepublic.com/focus/f-news/2178604/posts

"I don't see frankly much out there that really does
the job, and that's partially because investors are their own worst enemy," says
former SEC Chairman Arthur Levitt. "They refuse to invest skeptically, and are
too easily seduced by all the purveyors of financial products that prey upon
their worst instincts." "Investor Education 101: How to Avoid Scams: Outreach Programs
Target Most-Vulnerable Americans, But Success Is Hard to Assess," By Lynn
Cowan, The Wall Street Journal, May 9, 2006; Page D3 ---
http://online.wsj.com/article/SB114713241888747241.html?mod=todays_us_personal_journal

An onslaught of investor education is being
unleashed, thanks to an ever-growing stockpile of money set aside for this
purpose by regulators.

Senior-citizen investors being preyed upon? The
nonprofit Investor Protection Trust is financing a Florida state program
that teaches retirees to identify and report suspected scams.

Auto workers receiving lump-sum retirement buyouts
in coming months? There is a new Securities and Exchange Commission
publication that warns that they could be prime targets for fraud.

There seems to be no end to the list of
publications, public-service announcements and seminars being funded in the
wake of a landmark settlement in 2003 between regulators and Wall Street
over stock analysts' conflicts of interest. The settlement provided $80
million in investor-education funds, and regulators add to that amount every
year with more penalties for new securities-industry transgressions.

Unfortunately, there's also a seemingly infinite
trove of outright hucksters and smooth marketing materials bombarding
investors every day, say regulators and observers. And no one knows how
effective investor-education programs are in combating them.

"I don't see frankly much out there that really
does the job, and that's partially because investors are their own worst
enemy," says former SEC Chairman Arthur Levitt. "They refuse to invest
skeptically, and are too easily seduced by all the purveyors of financial
products that prey upon their worst instincts."

There's also little information available about
what kinds of programs really work to educate and protect investors.
Regulators and investor-education specialists say they are working hard to
expand their materials beyond brochures with basic information to encompass
interactive games for students, television programs and in-person seminars.

But regulators add that they are also fighting
against strong forces in their battle to educate and protect investors from
scam artists, their own emotions and a legacy of conflicts of interest in
the brokerage industry.

Scam artists are the most easily identified
investor-protection issue: Often organized in pyramid, or "Ponzi,"
structures, the schemes promise outsized returns and can exist for years
before collapsing. Investor-protection programs can easily focus on warning
about this kind of threat because it has some obvious hallmarks.

Regulators' second villain is trickier: investors'
own inertia and greed. Getting most people in the U.S. to learn the basics
of a careful investing strategy is akin to asking them to read a legal
footnote, but there is no shortage of people willing to sign up for the
chance to earn 130% on ersatz securities.

Possibly the most innovative investor-education
program in existence today targets investors who are drawn to these
get-rich-quick scams. The SEC runs several Web sites that pose as can't-fail
investment schemes. One,growthventure.com,
outlines the business dealings of a fake
construction-supply company, Growth Venture, which invites viewers to invest
and receive returns of 350% a year. Anyone falling for the bait is linked to
an SEC page that gently chides them and describes how to avoid scams.

But such educational tools aren't as easy to
construct for one of the thorniest issues facing investor-education
programs: teaching people about protecting themselves in daily interactions
with the legitimate brokerage industry.

Although larger Ponzi scams, such as the Financial
Advisory Consultants bust in California in 2004, are headlined for bilking
investors out of as much as $300 million, industry wide brokerage scandals
involving well-known firms have surpassed $1 billion apiece. From Prudential
Securities' abusive sales of limited partnerships in the early 1990s to the
conflicts of interest in analyst research in the late 1990s, major Wall
Street firms appear to be struggling with improper systematic conduct every
decade.

Yet investor educators often express concern about
finding the right balance between warning investors and condemning a highly
regulated industry that provides legitimate advice and services.

Continued in article

Jensen Comment
Also be careful what mutual fund or brokerage firm you deal with. My advice is
to avoid high-commission brokerage firms. My advice is to also compare the
mutual fund expense rates with benchmark rates of Vangaard and Fidelity.

The Securities and Exchange Commission says it has
set aside about $450 million for payments to outside whistleblowers whose
information results in successful cases and penalties collected from
companies or individuals.

The SEC set up the program in accordance with the
financial overhaul law enacted in July. It follows intense public criticism
of the agency for the breakdown that allowed Bernard Madoff's
multibillion-dollar fraud to go undetected for 16 years, despite numerous
red flags raised by whistleblowers.

A report issued Friday by the SEC shows it has put
$451.9 million into a new fund to pay whistleblowers, which must have a
minimum $300 million.

Some people are impulsive and impatient; they
prefer a dollar or a donut today far more than a dollar or a donut tomorrow,
so much so that they’re willing to give up shocking amounts of dollars and
donuts tomorrow for just one today. This is one reason, some say, that we
see such high interest rates for short-term borrowing, from New York to
Calcutta.

Some people are not only impulsive and impatient,
but inconsistently so. they care a lot about a dollar today versus tomorrow,
but could care less between getting a dollar either 10 or 11 days from now.
Economists call this ‘hyperbolic discounting’.

Both behaviors–impatience and time inconsistency–could be a source of
persistent poverty.

Or not. Abhijit Banerjee
presented
a new paper hereyesterday, written with MIT
colleague Sendhil Mullainathan. They look at a number of seemingly unusual
behaviors by the very poor–from exorbitant rates of short-term borrowing to
the low take-up of small, high-return investments. Impatience cannot explain
the patterns, they say. The impatience approach also requires the poor think
differently than the rest of the population.

Another view: we’re all impulsive and impatient in
the same way, but over a narrow range of goods that are quickly and cheaply
satisfied. If you’re poor, these temptations are a big fraction of your
income. If you’re even somewhat wealthy, they are not. Temptations are
declining in income.

The paper runs through half a dozen perplexing
patterns of behavior, and shows that these simple assumptions can explain a
great deal.

This approach has a great deal in common with
hyperbolic discounting, but is empirically distinct (and has very different
policy implications). Parsing out and testing these subtleties strikes me as
one of the most important frontiers in the study of poverty. Declining
temptation, if true, could explain all sorts of odd behaviors. With more
than a few Uganda and Liberia surveys on the horizon, I’m now scheming ways
to test whether it’s true.

It’s a difficult paper, especially for
those uninitiated in micro-economic theory. Even if that sounds like you:
the subtle points are worth the slog.

78% of former NFL players have gone
bankrupt or are under financial
stress because of joblessness or divorce.
Championship Rings in pawn shops, IRS vaults, Ponzi schemer stashes offshore, or
in the clutches of ex-wives

By the time they have been retired for two
years, 78% of former NFL players have gone bankrupt
or are under financial stress because of joblessness or divorce.

Within five years of retirement, an estimated
60% of former NBA players are broke.

Numerous retired MLB players have been
similarly ruined.

If that's not bad enough, the recession
has made things even worse. Too much money in real estate; investments in
Ponzi schemes; and poor financial advising have been exposed with the down
economy.

A sign
of the times? More former stars are
selling their championship rings for money than ever."It's amazing that I heard the recession was over,"
says Timothy Robins, owner ofChampionshiprings.net,
who buys bling from current and former pros and has
seen a 36% increase in sales during the past year. "I'm getting more calls
from players than ever. They're having a really hard time."

While just about everyone has
lost
moneyover the past year, athletes
tend to make particularly bad financial decisions, and it's not just
reckless spending.

Avoid hucksters that try to sell you knowledge of how to take
advantage of naive investors in inefficient equity markets!
Especially avoid those high pressure "FREE workshops" in posh hotels that try to
sell books, software, and schemes for beating the market.

The Securities and Exchange Commission has filed
civil fraud charges against two promoters who illegally made millions
selling a get-rich-quick stock trading system they touted on TV and at
investor workshops at hotels in dozens of cities nationwide.

The Commission's complaint alleges that Linda Woolf
and David Gengler, both of Utah, duped seniors and others who had attended
free introductory seminars into believing they would make extraordinary
stock market profits if they bought expensive "Teach Me to Trade" (TMTT)
classes, mentoring, and computer software.

In order to con victims into paying as much as
$40,000 for TMTT products and services, the Commission alleges that Woolf
and Gengler lied about their success with the trading system, when in truth
neither Woolf nor Gengler ever purchased TMTT's products or became
successful traders.

"The allegations depict a cold-hearted scheme that
preyed on the elderly, the desperate, and even the unemployed by promising
financial security while instead robbing victims blind," said SEC Chairman
Christopher Cox. "The Commission's charges should send a warning to all
those who would masquerade as successful traders on TV while prowling the
country for victims."

Linda Chatman Thomsen, Director of the SEC's
Enforcement Division, added, "The evidence shows they callously urged
customers to go into debt to purchase expensive products and services.
Today's charges make clear that we will hold accountable those who prey on
seniors and other investors."

The Commission's complaint alleges that at their
workshop presentations between 2003 and 2006, Woolf and Gengler made false
and misleading statements to sell TMTT packages of personal mentoring,
software and classes ranging in price from approximately $11,000 to $40,000.
According to the Commission's complaint, Woolf and Gengler also appeared in
television infomercials portraying themselves as successful former TMTT
customers, with Woolf targeting retirees, among others. In his workshops,
Gengler urged investors to borrow against their retirement accounts to
follow TMTT strategies.

Through false stories of their own trading success
and bogus claims of a 96.5 percent success rate for TMTT students who
purchased personal mentoring, courses, and software, Woolf and Gengler
convinced attendees that they, too, would make extraordinary profits in the
stock market if they followed TMTT's trading strategies that emphasized
options trading and short-term swing trading.

In one infomercial, for example, Woolf told how she
used to be an elementary school teacher and was able to replace her entire
income after attending TMTT workshops. "I had no idea it was that easy to
learn how to make money in the stock market," Woolf said. In another
infomercial, Gengler claimed, "If you can simply follow steps and follow our
principles, you'll make money. It's that simple."

Instead, the Commission alleges, Woolf and Gengler
are unsuccessful traders, with Woolf having never declared a trading profit
on her federal tax returns and Gengler typically declaring losses, or no
profits. However, Woolf reaped approximately $4 million in commissions from
selling TMTT packages, and Gengler made approximately $2.25 million,
according to the Commission's complaint.

The Commission's complaint against Woolf and
Gengler seeks disgorgement of their ill-gotten gains, civil money penalties
and permanent injunctions enjoining the defendants from violating the
antifraud provisions of the federal securities laws.

In a related action, the U.S. Attorney's Office for
the Eastern District of Virginia has announced the filing of an indictment
against Woolf and Gengler.

The Commission acknowledges the assistance of the
U.S. Attorney's Office for the Eastern District of Virginia, the U.S. Postal
Inspection Service, the Federal Bureau of Investigation and the Florida
Attorney General's Office.

The Commission's investigation is continuing.

Questions
Should you believe these many claims that the equity capital markets are
inefficient and that it's worth investing the time and money to beat the market?

Answer
A Dartmouth College finance professor would have us conclude that in recent
years the equity markets are a bit like Las Vegas. It's possible to leave Las
Vegas more than a million dollars ahead if you take high risks, but the odds are
decidedly in favor of the casinos. Similarly, it's possible to beat the stock
index funds if you take the risks, but the odds are definitely against beating
the index funds.

This we return to the age old paradox. It's rather useless to carefully
conduct a financial analysis of audited accounting reports in an effort to gain
superior knowledge to take advantage of more naive investors. On the other hand
if a sufficiently large number of investors did not make a sufficient number of
"sophisticated-knowledge" buys and sells the equity markets might be less
efficient. Even in efficient markets we must remain diligent in restraining
earnings management and other types of creative accounting ploys that mislead
sophisticated investors.

Sophisticated investors (apart from insiders) cannot take advantage of naive
investors because there are so many sophisticated investors. Of course insiders
can exploit efficient markets, but the SEC spends most of its budget trying to
prevent insider trading. If the SEC was not successful in this effort by and
large, the equity capital markets would cease to exist. This is why corporate
executives turned more to stealing from their own companies (e.g., outrageous
salaries, kickbacks and options backdating) rather than in exploiting inside
information for direct buying and selling of their (or their sex partners and
family) own shares at timely points in time.

"Can You Beat the Market? It’s a $100 Billion Question," by Mark Hulbert,
The New York Times, March 9, 2008 ---
Click Here

The study, “The Cost of Active Investing,” began
circulating earlier this year as an academic working paper. Its author is
Kenneth R. French, a finance professor at Dartmouth; he is known for his
collaboration with Eugene F. Fama, a finance professor at the University of
Chicago, in creating the Fama-French model that is widely used to calculate
risk-adjusted performance.

In his new study, Professor French tried to make
his estimate of investment costs as comprehensive as possible. He took into
account the fees and expenses of domestic equity mutual funds (both open-
and closed-end, including exchange-traded funds), the investment management
costs paid by institutions (both public and private), the fees paid to hedge
funds, and the transactions costs paid by all traders (including commissions
and bid-asked spreads). If a fund or institution was only partly allocated
to the domestic equity market, he counted only that portion in computing its
investment costs.

Professor French then deducted what domestic equity
investors collectively would have paid if they instead had simply bought and
held an index fund benchmarked to the overall stock market, like the
Vanguard Total Stock Market Index fund, whose retail version currently has
an annual expense ratio of 0.19 percent.

The difference between those amounts, Professor
French says, is what investors as a group pay to try to beat the market.

In 2006, the last year for which he has
comprehensive data, this total came to $99.2 billion. Assuming that it grew
in 2007 at the average rate of the last two decades, the amount for last
year was more than $100 billion. Such a total is noteworthy for its sheer
size and its growth over the years — in 1980, for example, the comparable
total was just $7 billion, according to Professor French.

The growth occurred despite many developments that
greatly reduced the cost of trading, like deeply discounted brokerage
commissions, a narrowing in bid-asked spreads, and a big reduction in
front-end loads, or sales charges, paid to mutual fund companies.

These factors notwithstanding, Professor French
found that the portion of stocks’ aggregate market capitalization spent on
trying to beat the market has stayed remarkably constant, near 0.67 percent.
That means the investment industry has found new revenue sources in direct
proportion to the reductions caused by these factors.

What are the investment implications of his
findings? One is that a typical investor can increase his annual return by
just shifting to an index fund and eliminating the expenses involved in
trying to beat the market. Professor French emphasizes that this typical
investor is an average of everyone aiming to outperform the market —
including the supposedly best and brightest who run hedge funds.

Professor French’s study can also be used to show
just how different the investment arena is from a so-called zero-sum game.
In such a game, of course, any one individual’s gains must be matched by
equal losses by other players, and vice versa. Investing would be a zero-sum
game if no costs were associated with trying to beat the market. But with
the costs of that effort totaling around $100 billion a year, active
investing is a significantly negative-sum game. The very act of playing
reduces the size of the pie that is divided among the various players.

Even that, however, underestimates the difficulties
of beating an index fund. Professor French notes that while the total cost
of trying to beat the market has grown over the years, the percentage of
individuals who bear this cost has declined — precisely because of the
growing popularity of index funds.

From 1986 to 2006, according to his calculations,
the proportion of the aggregate market cap that is invested in index funds
more than doubled, to 17.9 percent. As a result, the negative-sum game
played by active investors has grown ever more negative.

The bottom line is this: The best course for the
average investor is to buy and hold an index fund for the long term. Even if
you think you have compelling reasons to believe a particular trade could
beat the market, the odds are still probably against you.

Avoid hucksters that try to sell you knowledge of how to take
advantage of naive investors in inefficient equity markets!
Especially avoid those high pressure "FREE workshops" in posh hotels that try to
sell books, software, and schemes for beating the market.

The Securities and Exchange Commission has filed
civil fraud charges against two promoters who illegally made millions
selling a get-rich-quick stock trading system they touted on TV and at
investor workshops at hotels in dozens of cities nationwide.

The Commission's complaint alleges that Linda Woolf
and David Gengler, both of Utah, duped seniors and others who had attended
free introductory seminars into believing they would make extraordinary
stock market profits if they bought expensive "Teach Me to Trade" (TMTT)
classes, mentoring, and computer software.

In order to con victims into paying as much as
$40,000 for TMTT products and services, the Commission alleges that Woolf
and Gengler lied about their success with the trading system, when in truth
neither Woolf nor Gengler ever purchased TMTT's products or became
successful traders.

"The allegations depict a cold-hearted scheme that
preyed on the elderly, the desperate, and even the unemployed by promising
financial security while instead robbing victims blind," said SEC Chairman
Christopher Cox. "The Commission's charges should send a warning to all
those who would masquerade as successful traders on TV while prowling the
country for victims."

Linda Chatman Thomsen, Director of the SEC's
Enforcement Division, added, "The evidence shows they callously urged
customers to go into debt to purchase expensive products and services.
Today's charges make clear that we will hold accountable those who prey on
seniors and other investors."

The Commission's complaint alleges that at their
workshop presentations between 2003 and 2006, Woolf and Gengler made false
and misleading statements to sell TMTT packages of personal mentoring,
software and classes ranging in price from approximately $11,000 to $40,000.
According to the Commission's complaint, Woolf and Gengler also appeared in
television infomercials portraying themselves as successful former TMTT
customers, with Woolf targeting retirees, among others. In his workshops,
Gengler urged investors to borrow against their retirement accounts to
follow TMTT strategies.

Through false stories of their own trading success
and bogus claims of a 96.5 percent success rate for TMTT students who
purchased personal mentoring, courses, and software, Woolf and Gengler
convinced attendees that they, too, would make extraordinary profits in the
stock market if they followed TMTT's trading strategies that emphasized
options trading and short-term swing trading.

In one infomercial, for example, Woolf told how she
used to be an elementary school teacher and was able to replace her entire
income after attending TMTT workshops. "I had no idea it was that easy to
learn how to make money in the stock market," Woolf said. In another
infomercial, Gengler claimed, "If you can simply follow steps and follow our
principles, you'll make money. It's that simple."

Instead, the Commission alleges, Woolf and Gengler
are unsuccessful traders, with Woolf having never declared a trading profit
on her federal tax returns and Gengler typically declaring losses, or no
profits. However, Woolf reaped approximately $4 million in commissions from
selling TMTT packages, and Gengler made approximately $2.25 million,
according to the Commission's complaint.

The Commission's complaint against Woolf and
Gengler seeks disgorgement of their ill-gotten gains, civil money penalties
and permanent injunctions enjoining the defendants from violating the
antifraud provisions of the federal securities laws.

In a related action, the U.S. Attorney's Office for
the Eastern District of Virginia has announced the filing of an indictment
against Woolf and Gengler.

The Commission acknowledges the assistance of the
U.S. Attorney's Office for the Eastern District of Virginia, the U.S. Postal
Inspection Service, the Federal Bureau of Investigation and the Florida
Attorney General's Office.

The 2013 list is little changed from a year earlier and
for a second year is headed by:

1. Identity theft: The IRS spotlighted
its measures, including its new
Identity Protection web portal, to prevent and combat the growing
problem of tax fraud involving stolen identities, which it called one of its
top priorities. During 2012, the IRS prevented issuance of $20 billion in
fraudulent refunds including those related to identity theft, up from $14
billion in 2011, it said. The IRS also noted that its
identity theft enforcement sweep in January led to nearly 300
indictments, complaints, and arrests, on top of thousands of enforcement
actions against identity theft tax fraud in 2012. (See “Dozens
indicted on stolen identity tax refund fraud charges.”)

2. Phishing: The IRS again this year
warned against fake electronic communications designed to obtain recipients’
information, reminding that the IRS does not initiate contact with taxpayers
by email, text messages, or social media to request personal or financial
information.

3. Return preparer fraud: In addition to
suggesting taxpayers make sure paid preparers sign returns and enter their
preparer tax identification number (PTIN), the IRS this year included
information about using Form 14157, Complaint: Tax Return Preparer,
to report abusive tax preparers.

4. Hiding income offshore: This warning
also updated the number of participants in the IRS’s Offshore Voluntary
Disclosure Program to 38,000 and its collections to $3.4 billion from the
2009 program alone (March 23, 2009, through Oct. 15, 2009) and $1
billion so far in “up-front” payments from the 2011 program (Oct. 16, 2009,
through Sept. 9, 2011). In
2012, the program was extended indefinitely. (See “IRS
announces third offshore voluntary disclosure program.”

5. “Free money” from the IRS and tax scams
involving Social Security: With fliers and advertisements
“appearing in community churches around the country,” promoters of schemes
promising refunds for returns with little or no documentation have enticed
“unsuspecting and well-intentioned” victims, some of whom have spread the
word to friends and relatives, the IRS said. One scheme falsely advises
taxpayers to claim the American opportunity tax credit even if they have no
current qualifying educational expenses.

6. Impersonation of charitable organizations:
Some fraudsters have doubly victimized people hit by a natural disaster by
claiming to be working on behalf of the IRS to help them claim a tax
casualty loss but instead steal their financial and personal information.
This replaced “abuse of charitable organizations and deductions” from the
2012 list.

7. False/inflated income and expenses:
Exaggerating wage or self-employment income is a common ploy by some
unscrupulous preparers to inflate refundable credits, including the earned
income tax credit, by more than any additional tax.

8. False Form 1099 refund claims: One
scheme involves issuing a bogus information return, often Form 1099-OID,
Original Issue Discount, to the IRS. A refund is then claimed on a
corresponding tax return. The IRS says this is based on the theory that “the
federal government maintains secret accounts for U.S. citizens and that
taxpayers can gain access to the accounts by issuing 1099-OID forms to the
IRS.”

9. Frivolous arguments: The IRS maintains
a webpage describing some of the more common and legally fanciful of
these theories.

10. Falsely claiming zero wages: A Form
4852, Substitute Form W-2, or “corrected” Form 1099-MISC,
Miscellaneous Income, is fraudulently filed to reduce or eliminate
income on a legitimate information return. Sometimes it is accompanied by a
frivolous argument regarding the income.

11. Disguised corporate ownership: The
IRS said it works with state authorities to identify entities by which
taxpayers underreport income, claim bogus deductions, and engage in other
misconduct.

12. Misuse of trusts: The IRS said it has
seen an increase in improper use of private annuity trusts and foreign
trusts to shift income and deduct personal expenses.

Jensen Comment
To this we will soon add underreporting of income for fraudulent claims to
Medicaid and health care subsidies ---
http://www.trinity.edu/rjensen/Health.htm
The sad thing is that the IRS refuses to enforce rules against such fraud. For
example, half the Medicaid recipients in Illinois purportedly are not eligible
for such free medical care and medications. As far as I can tell nobody is doing
anything to prevent this type of fraud.

Taxpayers beware: Scammers are out there and
they're digging for your personal information and for money.

The IRS is reporting an increase in tax return
related scams that typically involve taxpayers who normally do not have to
file federal taxes. The scammers con the taxpayers into believing they
should file a return with the IRS for tax credits, refunds or rebates for
which they are not entitled.

Some unscrupulous tax return preparers have been
deceiving people into paying for advice about how to file false claims and
some charge unreasonable amounts for preparing legitimate returns that could
have been prepared for free by the IRS or by IRS sponsored Volunteer Income
Tax Assistance partners.

Many of the scammers are targeting taxpayers in the
Midwest and in the South, according to Sue Hales, spokeswoman for the IRS
for Illinois. Some are stealing the identities of conned taxpayers and they
most often prey on low income individuals and the elderly.

Taxpayers should be wary of any of the following
claims:

-- Fictitious claims for refunds or rebates based
on excess or withheld Social Security benefits;

-- Claims that Treasury Form 1080 can be used to
transfer funds from the Social Security Administration to the IRS, enabling
a payout from the IRS;

-- Unfamiliar for-profit tax services teaming up
with local churches. Flyers and advertisements for free money from the IRS,
suggesting the taxpayer can file with little or no documentation, have been
appearing in community churches around the country. Promoters are targeting
church congregations and exploiting their good intentions and credibility.
These schemes often spread by word of mouth among unsuspecting,
well-intentioned people telling friends and relatives;

-- Home-made flyers and brochures implying credits
or refunds are available without proof of eligibility;

-- Promises of refunds for "Low income -- No
Documents Tax Returns."

-- Claims for the expired Economic Recovery Credit
Program or Recovery Rebate Credit;

-- Advice on using the Earned Income Tax Claims
based on exaggerated reports of self-employment income;

-- In some cases, non-existent Social Security
refunds or rebates have been the bait used by the con artists. In other
situations, taxpayers deserve the tax credits they are promised but the
preparer uses fictitious or inflated information on the return which results
in a fraudulent return.

Continued in article

Unfortunately there's not much you can do personally to protect yourself
on this one other than to file your tax return early, and it's a little late for
that!

A bogus tax return using a stolen Social Security
number is submitted to the Internal Revenue Service early in the tax-filing
season. Because the IRS does not know the return involved identity theft, it
sends a refund.

When the real tax return is filed, it gets flagged
as a duplicate, freezing any refund. It sometimes takes months for the
innocent, legitimate taxpayer to sort it all out with the IRS.

Filings of fictitious tax returns to steal refunds
have jumped dramatically, perhaps because con artists can file them
electronically and get a direct-deposit refund long before the real taxpayer
finds out.

From 2002 to 2007, the number of fraudulent tax
return complaints to the Federal Trade Commission jumped to 20,782, from
3,061, according to a report by the Treasury Inspector General for Tax
Administration, or TIGTA.

The rise in fraudulent tax returns was an issue at
a Senate Finance Committee hearing last week called by the committee
chairman, Sen. Max Baucus (D-Mont.). "I am disappointed that the IRS does
not notify a taxpayer when someone else has filed a return using the
victim's Social Security number," he said.

Nina E. Olson, the national taxpayer advocate, who
provides an independent voice on behalf of taxpayers, told the committee she
is concerned the IRS does not know how many taxpayers are affected by
identity theft and said the problem may be more widespread than IRS data
suggest.

Another witness, J. Russell George, the inspector
general for tax administration, said the IRS "processes and procedures have
been inadequate in reducing the burden for taxpayers who have been
victimized. When the IRS becomes aware of employment-related identity theft,
it does not take action unless the case relates to a substantive tax or
conspiracy violation."

Unless the IRS acts to address identity theft and
related computer security issues, George said, "there is no deterrent to
keep the problem from spreading."

Olson, in additional testimony submitted to the
committee, said her staff is receiving calls from senior citizens who filed
for this year's tax rebate after not filing returns for several years and
who have discovered that someone else has been using their Social Security
numbers on tax returns.

She and George also described another common scam
involving tax returns.

These cases often involve illegal immigrants and
undocumented workers who use another person's identity -- name, Social
Security number or both -- to obtain employment. The employer files a wage
and tax statement, the W-2, under the stolen identification information, and
the IRS computers attribute the earnings according to the Social Security
number. Then the IRS levies an additional tax on the lawful owner of the
Social Security number, creating consequences for the innocent person.

There are thousands of commercial taxpayer assistance companies,
attorneys, and accountants that charge fees and deal with varying levels of
tax problem complexities. Be sure to investigate the credentials and
reputations of these service providers. There are many fraudulent taxpayer
serivice firms ---
http://www.trinity.edu/rjensen/FraudReporting.htm#TaxScams
Unless the provider has an established reputation, don't deal over the phone
or the Internet. A local provider should have an office and an address other
than a postal box. Taxpayer assistance is an area where you may not get what
you pay for.

The IRS warned taxpayers Wednesday not to be duped
by scammers posing as private debt collectors the agency has hired to chase
unpaid tax debts.

The Internal Revenue Service designed the debt
collection program to minimize that risk "because we know what it's like out
there with regard to identity theft nowadays," said Brady Bennett, IRS
director of collection.

But some critics of the program see so many
pitfalls that they're urging debtors to insist on negotiating payment
directly with the IRS.

The National Treasury Employees Union, which
represents IRS employees and opposes the program, has even drafted a sample
letter that taxpayers can send to opt out of the private collection program
and demand that the IRS handle their case.

The IRS plans to assign 12,500 accounts with unpaid
tax debts to three private agencies beginning Sept. 7. About 40,000 accounts
will be turned over by the end of the year. The IRS chose taxpayers who owe
less than $25,000 and don't dispute the debt.

Anyone contacted by a private collection agency has
the right, among others, to insist that only the IRS deal with their
account. Bennett said he hoped few taxpayers with debts sent to private
collectors would opt out.

"The purpose of this program is to provide value to
the American taxpayer. Those who don't pay have an impact on everybody else
who does," he said.

More tax preparers indicted over telephone tax refund scams"We saw limited but serious instances of abuse," said
IRS Acting Commissioner Kevin M. Brown. "We used our enforcement resources to
move swiftly and decisively to protect this valuable refund for the vast
majority of taxpayers and tax preparers who are requesting it properly. We want
everyone who is eligible for the telephone tax refund to get it but not to
inflate the amount requested." The IRS has been monitoring telephone excise tax
refund requests for potential problems. Shortly after the tax-filing season
opened in early January, the agency observed problems with returns from some tax
preparers that indicated possible criminal intent. Along with the search
warrants carried out by the IRS, other tax preparers across the nation who
prepared questionable telephone tax refund requests received visits from IRS
revenue agents (auditors) and special agents. The IRS has advised taxpayers to
stay away from unscrupulous promoters and tax preparers who make false claims
about the telephone tax refund and suggest that many, if not most, phone
customers can get hundreds of dollars or more back under this program. AccountingWeb, June 2007 ---
http://www.accountingweb.com/cgi-bin/item.cgi?id=103623

The Internal Revenue Service learned late Friday of
a new tax scam on the Internet that lures taxpayers into filing tax
information on a site masquerading as a member of the Free File Alliance.

The latest twist on tax scams involves tax
preparation Web sites that inaccurately say they are part of the Free File
Alliance, a partnership between 19 tax software companies and the IRS, for
taxpayers with an adjusted gross income of $52,000 or less.

The IRS said it is working with the Treasury
Inspector General for Tax Administration to look into allegations that the
Web sites -- which were not identified -- accepted tax information from
taxpayers, changed the taxpayers’ bank account numbers to their own and then
filed the return through a legitimate Free File partner.

The IRS reminded taxpayers the only place to access
the Free File program is through the official IRS.gov Web site.

Seventy percent of the nation's taxpayers are
eligible to use the free electronic filing system, although the IRS says few
taxpayers take advantage of the program.

Question
What are the "dirty dozen" things that bad guys might try to do to you in
tax season?The answer comes from IRS Commissioner Mark V. Everson

Two new schemes have joined
the Internal Revenue Service’s (IRS’) list of most noxious tax scams this
filing season. Several usual suspects also remain on the list, which was
released earlier this week. The IRS reminds taxpayers and tax preparers that
involvement with tax schemes can lead to fines and even imprisonment.

“When it comes to
taxes, everyone has to pay their fair share,” IRS Commissioner Mark V.
Everson said in a prepared statement detailing the 2006 list. “I urge
taxpayers not to be taken in by hucksters who promise to lower or eliminate
taxes. Getting caught up in the Dirty Dozen or similar schemes can lead to
big headaches.”

The Dirty Dozen
List

Zero Wages
NEW! A taxpayer attaches either a Form 4852 (Substitute Form W-2) or a
“corrected” Form 1099 showing no or very little wages or other income. A
statement indicating the taxpayer is rebutting information submitted to
the IRS by the payer, a reference to the paying company’s refusal to
issue a corrected Form W-2 for fear of IRS retaliation or an explanation
on Form 4852 citing the “statutory language behind Internal Revenue Code
(IRC) 3401 and 3121,” may also be included when the tax return is filed.

Form 843
Tax Abatement NEW! This faulty interpretation of the IRC involves
the use of Form 843 by the taxpayer to request abatement of previously
assessed tax. Form 843 is used to provide a list of reasons for the
request, which often includes “Failed to properly compute and/or
calculate IRC Section 83 – Property Transferred in Connection with
Performance of Service.” This scam is most frequently used by those who
have not previously filed tax returns in an attempt to abate tax
assessed by the IRS through the Substitute for Return Program.

Phishing
Identity thieves, posing as financial institutions or even the IRS
itself, attempt to acquire personal information and financial data that
can be used to access the financial accounts of consumers. Ficticious
e-mail messages, phone calls and other correspondence, solicit taxpayer
Social Security Number, credit card number, PIN number and other data,
by pretending to notify them of suspicious activity on their account or
that their account is under audit/review. NOTE: The IRS DOES
NOT use e-mail to initiate contact with taxpayers about issues related
to their accounts. Taxpayers can confirm authentic IRS contact by
calling 800-829-1040.

Zero Return
Taxpayers enter all zeros or enter zero income, their withholding and
write “nunc pro tunc” (“now for then” in Latin) on their federal tax
return. This is also done with amended returns in hope that the IRS will
disregard the original return on which they reported wages and other
income. This is similar to the “Zero Wages” listed in Number 1 above.

Trust
Misuse Taxpayers are encouraged, with promises of reducing the
income subject to tax deductions for personal expenses and reduced
estate or gift taxes, to transfer assets into trusts. Some trusts,
however, do not deliver the promised tax benefits. The IRS is actively
examining these arrangements, with more than 200 active investigations
currently underway, as well as three dozen injunctions obtained against
the promoters of non-performing trusts since 2001.

Frivolous
Arguments Promoters of this tactic have been known to make wild
claims including: the Sixteenth Amendment, concerning the power of
Congress to lay and collect taxes, was never ratified; wages are not
income; filing returns and paying taxes is voluntary; being required to
file Form 1040 violates the Fifth Amendment right against
self-incrimination or the Fourth Amendment right to privacy; and more.
These arguments are false and have been thrown out of court.

Return
Preparer Fraud Dishonest return preparers, who derive financial gain
by skimming a portion of their clients’ refunds and charging inflated
fees for return preparation services, cause many headaches for taxpayers
lured in by the promise of big refunds. Since 2002, the courts have
issued injunctions ordering dozens of individuals to cease preparing
returns. The Department of Justice has filed complaints against dozens
of others. More than 110 tax preparers were convicted of tax crimes
during fiscal year 2005.

Credit
Counseling Agencies The IRS Tax Exempt and Government Entities
Division is in the process of revoking the tax-exempt status of numerous
credit counseling organizations that operated under the guise of
educating financially distressed consumers with debt problems while
charging debtors large fees and providing little or no counseling.
Taxpayers are encouraged to exercise caution when considering utilizing
the services of credit counseling organizations that claim they can fix
credit ratings, push debt payment plans or impose high set-up fees or
monthly service charges that may increase existing debt levels.

Abuse of
Charitable Organizations and Deductions Tax-exempt organizations are
being increasingly used to improperly shield income or assets from
taxation. According to the IRS this can occur when a taxpayer moves
assets or income to a tax-exempt supporting organization or
donor-advised fund, but maintains control over the assets or income,
thereby obtaining a tax deduction without transferring commensurate
benefits to charity.

Offshore
Transaction Taxpayers continue to try to avoid U.S. taxes by
illegally hiding income in offshore bank and brokerage accounts, or
using offshore credit cards, wire transfers, foreign trusts, employee
leasing schemes, private annuities or life insurance policies, despite
crackdowns by the IRS and state tax agencies, which yielded 68
convictions on charges of promotion and use of abusive tax schemes
designed to evade taxes during fiscal year 2005.

Employment
Tax Evasion A number of illegal schemes, based on an incorrect
interpretation of Section 861 and other parts of tax law, instruct
employers not to withhold federal income tax, or other employment taxes,
from wages paid to their employees. The IRS has observed an increase in
activity in the area of so-called double dip parking and medical
reimbursement issues lately and courts have issued injunctions against
more than a dozen persons, ordering them to stop promoting the scheme.
More than 50 individuals were sentenced to an average of 30 months in
prison for employment tax evasion during fiscal year 2005. Employers can
also be held responsible for back payments of employment taxes, plus
penalties and interest. Employees who have nothing withheld from their
wages are still responsible for payment of their personal taxes.

”No Gain”
Deduction Taxpayers attempt to eliminate their entire adjusted gross
income (AGI) by deducting it on Schedule A by listing their AGI in the
section labeled “Miscellaneous Deductions” and attache a statement to
the return referring to court documents and including the phrase “No
Gain Realized.”

Report Suspected
Tax Fraud Activity

Suspected tax
fraud can be reported to the IRS using IRS Form 3949-A, Information Referral
or by sending a letter detailing the alleged fraudulent activity to the
Internal Revenue Service, Fresno, CA 93888. The letter should contain
specific information regarding who is being reported, the activity being
reported, how the individual reporting the activity gained knowledge of it,
when the activity took place, the amount of money involved and any
additional information that might be helpful in an investigation. The person
reporting the alleged violation are not required to identify themselves,
although it is helpful and their identity can be kept confidential. The
individual may also be entitled to a reward.

The two scams that
dropped of the “Dirty Dozen” list this year were the “claim of right” and
“corporation sole”. IRS personnel have noticed less activity using these
scams over the past year as a result of court cases against a number of
promoters.

IRS "Member Satisfaction Survey" is a ScamThe Internal Revenue Service has issued a consumer
alert regarding a new, two-step e-mail scam that falsely promises recipients
they will receive $80 for participating in an online customer satisfaction
survey. In the scam, an unsuspecting taxpayer receives an unsolicited e-mail
that appears to come from the IRS. The e-mail contains a URL linking to an
online "Member Satisfaction Survey." AccountingWeb, August 31, 2007 ---
http://www.accountingweb.com/cgi-bin/item.cgi?id=103950

Today I received an email asking me to log on to a
site in order to claim my income tax "refund"...$109.30! Just for fun, I
clicked on the link given and was taken to a screen that asked for my name,
SSN, birthdate, debit card number, PIN, expiration date and secret 3-digit
code on the back of the card! :)

Of course, if you put your cursor over the link
given in the scam email message, you can see the underlying "fake" web site
location.

The FDA today
strongly cautioned
consumers about
purchasing drugs
from 24 web sites
that may be involved
in the distribution
of counterfeit
drugs.

The FDA links two of
the 24 web sites to
counterfeit versions
of the weight loss
drug Xenical.

The FDA says that
Xenical's maker, the
drug company Roche,
tested three phony
Xenical pills
obtained from
brandpills.com and
pillspharm.com.

One phony Xenical
pill contained the
active ingredient in
another weight loss
drug. The two other
fake Xenical pills
contained only talc
and starch,
according to the
FDA.

The FDA has
previously linked
four of the 24 web
sites to counterfeit
versions of the flu
drug Tamiflu and
counterfeit versions
of the erectile
dysfunction drug
Cialis.

Overseas Web Sites

The web sites, which
the FDA says appear
to be operated
outside the U.S.,
are:

AllPills.net

Pharmacy-4U.net

DirectMedsMall.com

Brandpills.com

Emediline.com

RX-ed.com

RXePharm.com

Pharmacea.org

PillsPharm.com

MensHealthDrugs.net

BigXplus.net

MediClub.md

InterTab.de

Pillenpharm.com

Bigger-X.com

PillsLand.com

EZMEDZ.com

UnitedMedicals.com

Best-Medz.com

USAPillsrx.net

USAMedz.com

BluePills-Rx.com

Genericpharmacy.us

I-Kusuri.jp

The 24 web sites
appear on
pharmacycall365.com
under the "Our
Websites" heading,
the FDA notes.

FDA's Advice to
Consumers

The FDA says
consumers using
online pharmacies
should be wary if
there is no way to
contact a web site
pharmacy by phone,
if prices are
dramatically lower
than the
competition, or if
no prescription from
your doctor is
required.

The FDA's web site
includes these
safety tips for
people buying
prescription drugs
online:

Make sure the
web site
requires a
prescription.

Make sure the
web site has a
pharmacist
available for
questions.

Buy only from
licensed
pharmacies
located in the
U.S.

Don't provide
personal
information such
as credit card
numbers unless
you're sure the
web site will
protect that
information.

The FDA urges
consumers to visit
www.fda.gov/buyonline
for more information
before buying
prescription drugs
over the Internet.

Wow! It's hard to believer PayPal will go this far in protecting eBay
customers
Can PayPal continue to afford this kind of protection?On June 20, eBay announced that it will fully
reimburse buyers and sellers when transaction problems arise, providing they
use eBay’s PayPal payment service. That means eBay will foot the bill when,
say, a buyer purchases an item that was misrepresented on the site or not
sent. So, if that too-good-to-be-true bargain Gucci bag turns out to be a
cheap knockoff, eBay will give the buyer a refund. The additional
protections will go into effect this fall. “We’re combining the power of
eBay and PayPal to give all buyers and sellers more confidence and trust,”
said Lorrie Norrington, eBay’s president of Marketplace Operations in a
statement. “Buyers who pay with PayPal on eBay will be covered, with no
limits, on most transactions.” Catherine Holahan, Business Week, June 19, 2008 ---
http://www.businessweek.com/the_thread/techbeat/archives/2008/06/post_7.html?link_position=link3

Experienced eBay users swear by it, as one has more
recourse in the event of problems.

An experienced friend also tell me that it's a good
idea to open a new bank account specifically for PayPal purposes. The reason
is that you can move newly deposited funds to an account beyond PayPal's
reach. I'm told this prevents PayPal from sequestering your funds in the
event of a late protest by the source of the funds.

Geo

How to proceed if you're taken by a fraudulent eBay sellerWhile eBay officials say the vast majority of
transactions take place without a hitch, company spokesmen acknowledge that the
growth in online buying has been accompanied by a growth in online disputes,
from simple disagreements over a sweater's color to more serious allegations.
And, says eBay spokeswoman Catherine England, fraud also occurs against sellers,
when buyers don't pay up as agreed. Cracking down on such problems has been a
hot topic at the annual "eBay Live!" gatherings of buyers, sellers and company
executives. This year's, in Las Vegas in June, was no exception: EBay president
and chief executive Meg Whitman in her keynote speech ticked off a number of
improvements in eBay's online dispute-resolution process.
Kathleen Day, "Self-Defense For EBay Buyers Avoiding Unpleasant Surprises On
World's Biggest Auction Site," The Washington Post, July 2, 2006 ---
Click Here

Here's an eBay auction with a difference: an
apparently innocent-looking punt of a Sony VAIO VGN-NR21J/S laptop:

There then follows the usual item description, but
what makes this particular sale a little more interesting is the vendor's
candid purchasing advice for users of the world's favourite tat bazaar:

DIFFERENT WAYS YOU CAN STEAL THIS LAPTOP OFF ME:

PAYPAL:

Paypal is currently ebays preferred method of
stealing high value electrical items off sellers. There are a number of
various ways you can use to steal this laptop using paypal.

1: A Fake “Item Not Received” (I.N.R) Claim – All
you simply have to do here is purchase my item using an unverified paypal
account. Then when you receive the laptop, simply claim that you didn’t
receive it at your registered (credit card) and paypal will give you all
your money back !

2: A Fake “Item Significantly Not As Described” (S.N.A.D)
This is a great way to steal items off sellers. Simply start a dispute after
you get the laptop making up some lie about the item being damaged etc – You
could use Photoshop to make up fake pictures of damage. Paypal will ask you
to send the item back to me, but don’t bother – they never enforce that on
buyers and after a short wait you will get all your money back and you will
still have the laptop.

3: A fake “Unauthorised Use” Claim – This is a
super way of stealing items on ebay and is widely used. Simply claim that
someone hijacked your account (paypal & ebay) and that you didn’t order the
laptop. Then in conjunction with a fake I.N.R claim you can simply steal the
laptop and of course, get your money back.

4: A Stolen Credit card – Of course, ebay make no
real attempt to vet any of its buyers, so hey, just register a new ebay
account using fake ID information and link it to a paypal account set up
with a stolen credit card – and hey presto – A free laptop.

WESTERN UNION

Although officially banned on ebay, fake western
union payments are the preferred way for Nigerian Scammers to steal high
value electrical items. Simply email me (using pigeon English) telling me
that you would like to buy this item using Western Union – Tell me that you
would be happy to pay over the odds for the laptop and that it is a present
for your mother in law. Then send me a fake western union payment
notification and I send you the laptop – Perfect. This method of stealing
items off sellers is very widely used on ebay and of course, as ebay do not
properly verify buyers its easy to do. Make sure you use Pigeon English as I
am really really stupid and it’s bound to fool me.

MUGGING

If you are a traditionalist like me you may prefer
a good old mugging. Simply offer to meet me on some dodgy housing estate
somewhere and have a load of you mates hiding behind a hedge with a few iron
bars. Again, offer to pay me over the odds as there is nothing better than
using a sellers greed to bait them into a scam. I would be grateful if you
could avoid killing me as this will cause bad publicity for ebay which would
be terrible.

GENUINE BUYERS

In the unlikely event that you are actually a
genuine buyer then you really should be shopping in a real shop and not this
scammers paradise. However this laptop does really exist and is really for
sale. You can email me or skype me with suggestions on how we may actually
transact this item to both our satisfaction – with both our safety in mind.
Don’t even think of buying it using paypal. I’ve only listed it as accepted
because ebay run a protection racket that means I have to accept it. If you
do pay by paypal I will simply refund your payment and give you a nice new
shiny NEG.

FEEDBACK BLACKMAIL

Of course you will no doubt be aware that from May
onwards you will be able to blackmail sellers into giving you free P&P /
discounts etc. You will be able to give them neg feedback and they will not
be able to give you any.. I regret to advise you that because this rule does
not come in until May this option of scamming me is not open to you yet.

AUCTION WRECKING

I would grateful if some sad failed traffic warden
could report this auction for two reasons

1: Ebay will see this listing and will hopefully
close my account, saving me a 180 days wait to do it myself.

2: You will save me listing fees, making this a
free advert.

Happy Bidding!

Continued in article

Overpayment Scam on eBay and Craig's ListWhen is a “cleared
check” not necessarily a good check?

Selling something on eBay or Craig's List? Watch
out for who's signing the check to buy it.

Tens of thousands of Americans are being targeted
by the latest scam sweeping America, many of them targeted online through
Craig's List and eBay.

Scammers overpay with counterfeit checks that look
so good most banks accept them. It's only after victims have sent the
overpayment amount back to the scammers that they learn the checks are no
good, and they are out the money.

U.S. Postal Service officials say they have seized
more than $2 billion worth of high-quality counterfeit checks coming from
Nigeria, England, the Netherlands and Canada.

But, they say, many more phonies are still getting
through. . That's the kind of check Jill Parker, a pharmaceutical company
manager in Richmond, Va., got in the mail.

Using Craig's List to rent an apartment she owned
in Chicago, she was contacted by someone moving from London.

"He was going to send me a check for $25,000," she
told ABC News. "I was to deduct what he owned me for the first month's rent
and the security deposit, and I was to wire the balance back to his agent,
who was handling his furnishing."

She took the check to her bank and called a few
days later to see if it had cleared. Told that it had, Jill, as agreed upon,
wired the remaining $21,000, thinking she was ahead $4,000.

"Everything looked great; everything went fine
until about a week later," she said.

The bank informed her that the check was no good
and had been returned not paid. And Jill, not the bank, was out the money.

American banks say they are required by law to make
the money available well before a final determination is made as to whether
the check is good.

"Certain funds, for example, have to be available
on the day after deposit," Nedda Feddis, senior federal counsel for the
American Bankers Association, told ABC News. "And the fraudsters are taking
advantage of that rule."

Chris Soens, suffering from health problems,
thought she got a dose of good news in the mail when she won $90,000 in a
supposed European lottery.

Once the check had been deposited and posted to her
account, Chris wired back $40,000 for what she was told were fees and taxes.

When the check was discovered to be a phony, the
bank told Chris she had to repay the entire amount.

Her sister, Rebecca Woodworth, says it led to
suicide.

"I think she was devastated," she said. "I think
she was plunged into depths of despair knowing that everything she had was
gone."

The problem has grown so large that the U.S. Postal
Service is launching a nationwide TV campaign starting tomorrow to warn
Americans about the dangers of the bad check scam. The Postal Service has
also set up a new Web site to educate the public on check fraud:www.fakechecks.org
.

Man Sold Goods on EBay, Never DeliveredA 37-year-old man was found guilty Tuesday of
collecting more than $90,000 in payments for Rolex watches and sports tickets
through eBay but never delivering the merchandise to customers. A federal court
jury convicted him of 12 counts of mail fraud. Vartanian faces a maximum penalty
of 20 years in prison. He was arrested earlier this year in Fremont.
PhysOrg, August 8, 2007 ---
http://physorg.com/news105770216.html

Question
What can you do to prevent being taken on eBay?
(Word of Caution: Never open an email message that pretends to be from
Pay-Pal)

Two brothers have published a book of "true tales of
treachery, lies and fraud" from eBay. "Dawn of the eBay Deadbeats" contains
stories written by eBay buyers and sellers. From stories of disappointing
purchases to out-and-out fraud, the book is a manual of what can go wrong when
buying and selling on auction sites. Brothers Stephen and Edward Klink co-wrote
the book, illustrated by Clay Butler. The idea for the book sprung from a
website Stephen Klink had created. A New Jersey police office, he founded
eBayersThatSuck.com - a site that aims to help people avoid auction scams -
after he himself was ripped off online.
Ina Steiner, "Dawn of the eBay Deadbeats: New Book Uncovers Online Auction
Treachery," AuctionBytes.com, December 28, 2005 ---
http://www.auctionbytes.com/cab/abn/y05/m12/i28/s01

Imagine buying vintage Spiderman
comics for $16,000 and receiving instead, a box of printer paper or
losing a whopping $27,000 in purchasing a big rig that didn't exist in
the first place. These are just many of the online auction fraud horror
stories that brothers Edward and Steve Klink compiled from their eBay
watchdog Web site eBayersThatSuck.com (E.T.S.).

In their book "Dawn of the eBay Deadbeats," some
70 strange-but-true stories were collected and retold with the help of
illustratorClay Butler.

The December 2005 publishing of the book comes just in time as the
online auction giant has been criticized by consumer groups, most
recently by the U.K. magazine "Computing Which?" for its passive and
sometimes delayed approach in handling fraud reports.

At any given time, the site has 78 million listings, and 6 million new
listings are added each day.

And while, eBay maintains that less than .01 percent of all listings end
in a confirmed case of fraud, that could mean that of the 1.9 billion
listings reported by eBay in 2005, that 190,000 cases were confirmed
frauds in the last year.

Currently there are almost 900 horror stories from eBay fraud victims
are on the E.T.S. site whose motto is "Winning the war on deadbeats."

And already the brothers are working on the next volume of horror
stories, encouraging victims who want to get their tales to be told to
get into contact with them.

United Press International spoke with Edward Klink about the recent
book, their watchdog
Web site, and the current state of eBay.

"We had collected hundreds of stories on the Web site
and figured it was time to take these stories to a wider audience and
let the victims have their say," Edward Klink said. "Plus with our
combined backgrounds, Steve is a police officer and I'm a business writer,
we felt we were ideally suited to get the job done."

Fraud on eBay can take on many forms including items paid for that vary
from the description in the sale, unpaid items, and spoof eBay or
Pay-Pal e-mails.

And like the many victims on their site, the brothers too have
encountered the problem of auction fraud.

In 2003, Steve, a New Jersey police officer, won a set of "new"
speakers, only to find that it looked as if they were "gnawed on by a
wild animal."

"The seller said they weren't that way when mailed, and eBay said there
was nothing they could do," Klink said. "Annoyed that he was stuck with
the merchandise and given no recourse, Steve started
www.ebayersthatsuck.com and stories began pouring in from around the
world."

And the site has received a positive response since it's been up and
running.

"People love it," Klink said. "On eBay, their official boards are
closely monitored and talk about problems and scams and eBay's failings
are not generally tolerated. So E.T.S. gives them an outlet. When it
first came out Ebayersthatsuck.com was featured on Courttv.com and
newspapers as far away as South Africa."

According to Klink, while eBay has what could be considered --"the
ultimate
business model" -- of collecting fees and
delegating the marketing, selling, packaging, shipping, and customer service
to eBay users, it's very easy for these same users to fall victim to
fraud.

"I think consumers let their guard down when they are sitting at home
and surfing the Web with their coffee," he said. "If a stranger offered
them a $1,400 antique vase on the street they'd most likely walk away,
but when that same vase is on
the Internetfor some reason the reaction is
more, 'Say, now that looks interesting.'"

And have the brothers seen any improvements in eBay's handling of the
fraud issue?

"eBay says it is a tiny fraction of all auctions," Klink said, "but the
hundreds of people who told us their stories hate being in that tiny
group and never thought they would be. Lots of fraud is underreported,
too. EBay encourages users to settle it among themselves, and if they
can't, then they are directed to pay $20.00 to have SquareTrade, a third
party, mediate the dispute. But it's not often a scammer shows up for
mediation!"

. . .

"We want people on eBay to have a good buying and
selling experience - transparent, well-lit, and safe," the spokesperson
said. "Fraud on all levels is something we take seriously."

The company also has a team dedicated to working
with law enforcement rather it be educating them on fraudulent cases and
working proactively taking information on specific cases to them or
cooperating with investigations.

"We would invite anyone to visit the site and read
more," said the spokesperson, who also emphasized that the no. 1 issue for
online shoppers is to pay safely using Pay-Pal or a credit card than any
other form of payment.

In many cases, consumers are able to get their
money back, Pay-Pal offers up to $1,000 back with buyer protection and
credit card programs usually have a pay back program in cases of fraud. In
many cases, Pay-Pal offers a way for consumers to make purchases without
providing personal information and at the same time protecting money.

"Dawn of the eBay Deadbeats" ($12.95) is
available on Amazon, eBay, and in select bookstores.

"The Ol' Bait and Click: Devices Meant to Reassure Online Buyers Are
Often Used to Swindle Them," by Alan Sipress, The Washington Post,
March 16, 2007, Page D01 ---
Click Here

The eBay vendor had a glowing record -- more than
900 successful sales, with only a single complaint amid a long series of
positive testimonials from customers. So when a Georgia bidder won the
seller's auction for an Olympus digital camera in January, there seemed
little reason to worry about dispatching almost $700 into cyberspace.

But the camera never arrived.

"I don't think I will ever buy anything over the
Internet again," the conned bidder lamented in a posting on an eBay
discussion board. "I am not a wealthy person, had saved long and hard for
this camera for my business, and don't know when, or IF EVER I will see my
$700 again."

Ever since the early days of the Internet, Web
sites have struggled to find ways of reassuring users that a stranger could
be as honest as a well-known local merchant, as knowledgeable as a respected
teacher or as insightful as a wise grandparent. With Internet commerce now
estimated to exceed $100 billion a year and greater numbers of people
turning to the Internet for products, advice and love, Web sites are
crafting more elaborate rating and feedback systems -- reputation monitors
of sorts -- to help people evaluate whom they can trust. But the cheats have
also noticed the unprecedented chance for ill-gotten gains. This has set off
a high-stakes game of cat and mouse as Web sites spend more time and money
to secure their systems against those trying to game them.

"We are increasingly living in a mobile, virtual
world," said Chrysanthos Dellarocas, a professor of information systems at
the University of Maryland business school. "To retain some form of social
fabric in this world, we need some reputation mechanism."

One of the best-known reputation systems is the one
used by Amazon.com, which provides user-written reviews of the books and it
sells and then allows other users to rate the reviewers. Slashdot, a popular
technology and current affairs Web site, developed what it calls a "karma"
system for evaluating contributors. One of Yahoo's fast-growing features,
Yahoo Answers, now boasts 75 million users who ask and answer each other's
online questions about nearly any subject, with greater weight accorded to
those who earn expert ratings from other users.

"Reputation is key to it all," said Bradley
Horowitz, Yahoo's vice president of product strategy.

EBay established its position as the Web's premier
auctioneer in part by pioneering a system to allow buyers and sellers to
rate each other and comment on the quality of their transactions.

"It has been essential for eBay's success. It
increased trust in the marketplace and created a community," eBay chief
executive Meg Whitman said in an interview.

But users have repeatedly found ways to inflate or
wholly fabricate their reputations. The online encyclopedia, Wikipedia, was
thrown into turmoil late last month after users learned that one of the
site's major editors was not a tenured university religion professor as he
claimed in his online profile but a 24-year-old college dropout. At Amazon,
a computer glitch three years ago inadvertently exposed the real names of
reviewers writing under pseudonyms. Some turned out not to be disinterested
literary judges but authors giving their own books glowing reviews to boost
sales.

The scams take countless and ever more ingenious
forms. These include intimidating other users who give negative ratings by
threatening to retaliate with negative feedback of their own. Some con
artists also create false secondary accounts, known as "sock puppets," that
a cheat can use to give himself fake positive feedback. It also includes
piling up legitimate positive reviews and then closing in for the kill as an
eBay seller from New Jersey called "malkilots" did to nearly three dozen
would-be camera buyers, including the bidder from Georgia.

That scheme -- according to feedback, discussion
boards and auction descriptions on the eBay site -- went down like this:
Malkilots built a sterling track record by selling memory cards for digital
cameras for as little as $20 each. The vender sold them by the hundreds,
delivering them as promised and accumulating page after page of positive
feedback from satisfied customers.

Then, in late January, malkilots switched to
offering the cameras themselves, which regularly fetched more than $650. In
one auction, the Georgia bidder -- who communicated and did business only
under a user name and did not respond to e-mails -- put in the highest of 37
offers for an Olympus SLR professional camera, paying for it online. Instead
of receiving the camera, the buyer got a cheap camera bag.

"I had checked out the seller, all positive
feedback going back several years," the buyer wrote. "What I didn't check
out was WHAT kind of item that feedback was for."

Other successful bidders reported they also got
cheap bags instead of cameras -- if they got anything at all. With losses
totaling about $25,000, the bidders complained to eBay, which shut down the
vendor's account. Negative feedback streamed into the site calling malkilots
a fraud.

EBay did not return calls requesting comment on the
case.

Continued in article

Jensen CommentI've never purchased anything on eBay. But I do almost all my shopping (even
grocery shopping) on Amazon these days. I cannot say enough good things about
the product selections, prices, and service. I have an Amazon Visa for such
purposes that gives me lower prices, and I often get free shipping. For example,
Erika needed an extra-wide wheel chair because of her brace. At the moment we
use a wheel chair to carry her up and down the front porch steps. Her Boston
doctor wrote a prescription for temporary rental of the chair, but the price was
about $120 per week. I purchased a great one through Amazon for $138 that
included free shipping. The new high quality chair was here in the boonies in
less than five days.

It was the scandal that rocked
the internet. A seemingly worthless painting sold on
eBay in early 2000 for $135,805 -- all because
buyers believed it might be the work of the
20th-century abstract painter Richard Diebenkorn.

It wasn't.

Nor was the story behind
the painting true.

In fact, Sacramento,
California, lawyer
Kenneth Waltonhad forged
the suspiciously Diebenkorn-esque signature, which
appeared in an auction photograph, and concocted the
hokey yarn about finding it at a garage sale some
years back. Some of the highest bids, it turned out,
came not from serious art-buyers but from Walton's
eBay business partner, Ken Fetterman.

Before long the tangle of
deceits that led to the historic sale began to
unravel on the front pages of newspapers around the
country. Walton and another business partner, Scott
Beach, pled guilty to federal felony charges. After
three years as a fugitive, Fetterman was finally
arrested while on his way to a Frisbee golf
tournament in Kansas.

Walton tells his side of
this true internet crime story in his new memoir,
Fake: Forgery, Lies, & eBay. Wired News
spoke to him about the book and his experiences as
an online outlaw.

Carnegie Mellon University researchers are relying
on an old adage to develop anti-fraud software for Internet auction sites:
It is not what you know, it is who you know.

At sites like eBay, users warn each other if they
have a bad experience with a seller by rating their transactions. But the
CMU researchers said savvy fraudsters get around that by conducting
transactions with friends or even themselves, using alternate user names to
give themselves high satisfaction ratings -- so unsuspecting customers will
still try to buy from them.

The CMU software looks for patterns of users who
have repeated dealings with one another, and alerts other users that there
is a higher probability of having a fraudulent transaction with them.

''There's a lot of commonsense solutions out there,
like being more careful about how you screen the sellers,'' said Duen Horng
''Polo'' Chau, the research associate who developed the software with
computer science professor Christos Faloutsos and two other students. ''But
because I'm an engineering student, I wanted to come up with a systematic
approach'' to identify those likely to commit fraud.

The researchers analyzed about 1 million
transactions involving 66,000 eBay users to develop graphs -- known in
statistical circles as bipartite cores -- that identify users interacting
with unusual frequency. They plan to publish a paper on their findings early
next year and, perhaps, market their software to eBay or otherwise make it
available to people who shop online.

Catherine England, an eBay spokeswoman, said the
company was not aware of the research and would not comment on it. But
England said protecting the company's more than 200 million users from fraud
was a top priority.

Online auction fraud -- when a seller does not
deliver goods or sells a defective product -- accounted for 12 percent of
the 431,000 computer fraud complaints received last year by Consumer
Sentinel, the Federal Trade Commission's consumer fraud and identity theft
database. Auction fraud was the most commonly reported computer-related
fraud in the database.

And the scams run the gamut.

Last year, a federal grand jury indicted an Ohio
man on charges he sold hundreds of thousands of dollars of stolen Lego
merchandise on the Internet. Earlier this year, a New Mexico woman was
sentenced to nine years in federal prison for selling forged hunting
licenses on eBay, over the phone and by e-mail, and then not delivering
trips paid for by out-of-state hunters.

Earlier this month, a man who failed to deliver
tickets to the 2005 Ohio State-Michigan football game to 250 online auction
customers was sentenced to 34 months in federal prison.

Johannes Ullrich, an Internet fraud expert with the
SANS Institute in Bethesda, Maryland, said the CMU research ''sounds like a
credible way to detect fraud.''

''Essentially, what they're trying to do is find
these extended circles of friends who make positive recommendations to each
other,'' said Ullrich, the chief technology officer of SANS' Internet Storm
Center, which tracks viruses and other Internet problems.

But Ullrich said the CMU researchers must find a
way to screen out false positives. He said a small group of users -- such as
baseball card collectors -- might repeatedly buy from one another and could
be flagged as high-risk.

Faloutsos said the researchers have thought of that
in developing the software called NetProbe -- short for Network Detection
via Propagation of Beliefs.

''We're not just looking at your neighbors (on the
auction site),'' Faloutsos said. ''We're looking at the neighbors of your
neighbors, and the neighbors of your neighbors' neighbors.''

Question
Should there be a doughnut hole in the Medicare D coverage under Medicare's new
drug plan?

"Medicare Beneficiaries Confused and Angry Over Gap in Drug Coverage," by
Robert Pear, The New York Times, July 29, 2006 ---
Click Here

Tens of thousands of Medicare beneficiaries who
signed up for prescription drug coverage are paying monthly premiums, but
Medicare is not paying any of their drug costs because they have reached a
gap in their coverage.

The gap, the notorious “doughnut hole,” is
upsetting many beneficiaries, and it has become a potent symbol as
politicians debate the merits of the new program.

Federal officials and outside experts say that 3
million to 3.5 million people may fall into the gap this year, about half
the number predicted. While lawmakers and lobbyists were well aware of the
problem, it is attracting fresh attention because many beneficiaries are
just now discovering it.

The original estimates assumed that people would
sign up for drug coverage in January, but many waited until April or May.
They will file fewer claims than expected and are therefore less likely to
reach the gap in coverage this year.

Poor people eligible for Medicare and Medicaid have
no gap in the benefit. In addition, many retirees found that
employer-sponsored health plans provided better drug benefits than Medicare,
so they stayed in those plans, which rarely have a gap in coverage.

Beneficiaries often learn about the doughnut hole
when they try to refill prescriptions. They may be asked to pay $75 to $125
or more for a drug they had been receiving for a co-payment of $20 to $30.

Marcella Crown, 80, of Des Plaines, Ill., near
Chicago, takes Lipitor for high cholesterol, Diovan for high blood pressure,
Synthroid for thyroid disease, Fosamax for osteoporosis, Nexium for
heartburn and several other drugs.

Mrs. Crown signed up in November for a drug plan
offered by Blue Cross and Blue Shield of Illinois. Her coverage began in
January, and she reached the coverage gap in April.

Her husband, David F. Crown, a retired mechanical
engineer, said: “Blue Cross is saying that even though she will get no
benefit, she must still pay the premiums. That’s outrageous. We have never
had insurance policies that gave us no benefit yet required us to pay
premiums.”

Melvin A. Kinnison, 65, of Huntington Beach,
Calif., a retired deputy sheriff with diabetes and prostate cancer, said:
“The drug benefit was fine for a while, until the doughnut hole came around.
It was a total surprise. Nobody ever explained it to me.”

Mr. Kinnison said he reached the coverage gap in
June. The cost for a month’s supply of Cymbalta, which he takes for diabetic
nerve pain, jumped to $104, from $20.

Former Senator Dave Durenberger, a Minnesota
Republican who runs a national health policy forum, said, “The doughnut hole
could have negative repercussions for Republicans in the November midterm
elections.”

Democrats hope that is the case. The coverage gap
is “a goofy idea,” said Senator Byron L. Dorgan, Democrat of North Dakota.

Administration officials play down such concerns.

Dr. Mark B. McClellan, administrator of the Centers
for Medicare and Medicaid Services, said beneficiaries had already saved
about $1,500 by the time they reached the coverage gap. Beneficiaries
concerned about the gap, Dr. McClellan said, can often reduce their costs by
switching to generic drugs and by taking advantage of assistance programs
offered by many states and by drug manufacturers. Next year, he said, they
can switch to plans that offer some coverage in the gap.

While beneficiaries are generally responsible for
all drug costs in the gap, they do have access to discounts negotiated by
their plans.

Many beneficiaries, like Mr. and Mrs. Crown, had
heard about the coverage gap but did not fully understand how it worked.

Under the standard drug benefit defined by Congress
in the 2003 Medicare law, the beneficiary pays a $250 deductible and then 25
percent of drug costs from $251 to $2,250. When total yearly drug costs,
paid by the beneficiary and the plan, reach $2,250, the coverage stops, and
the beneficiary pays 100 percent of the cost of each prescription, until the
person’s out-of-pocket costs reach $3,600. At that point, insurance resumes,
and the beneficiary pays about 5 percent of the cost of each drug. The
tabulation of costs begins anew each year.

Wen A. Daniels of California Health Advocates, an
insurance counseling organization, said she had clients who reached the gap
in January or February because they were taking high-cost drugs like Avastin,
Gleevec and Iressa for different types of cancer; Pegasys for hepatitis;
Betaseron for multiple sclerosis; and Tracleer for a life-threatening lung
condition.

UnitedHealth, the largest sponsor of Medicare drug
plans, with 4.5 million members, said that 45,000 of them had reached the
point where the coverage gap begins.

Continued in article

Under no circumstance should
anybody sign up for a plan with a stranger over the telephone even if that
person claims to be a Medicare representative or a licensed insurance agent who
phoned out of the blue.

Government and
consumer watchdogs are bracing for the marketing scams likely to
spring up alongside the long-awaited Medicare drug benefit.

Already, the
Centers for Medicare and Medicaid Services, the federal agency
overseeing the new drug program, says it has enlisted help from
law-enforcement officials to investigate two possible scams in which
beneficiaries were asked for bank-card numbers and other personal
information.

Enrollment for
the plans starts Nov. 15, and coverage begins Jan. 1. Drug-plan
marketers are allowed to make calls to describe benefits and offers,
and to solicit requests for pre-enrollment information.

Yet it's
illegal for marketers of Medicare drug plans to visit your home
unless you invite them in advance, or to send you unsolicited
emails, says Deane Beebe, spokeswoman for the Medicare Rights
Center, a New York advocacy group. Although marketers can make
unsolicited phone calls, they aren't allowed to sign you up during
those calls.

Several advocacy groups, including the
National Consumers League (www.fraud.org/tips/internet/medicare.htm),
are offering tips for protecting yourself from being victimized by a
Medicare-related scam. Among the tips:

Check the list
of Medicare-approved prescription plans by calling the Centers for
Medicare and Medicaid Services at 800-633-4227. If you're contacted
by a plan that isn't on the list, it could be a scam.

Guard
personal information, such as Social Security or bank-account
numbers. Legitimate plans may ask for a Social Security number --
but not until you actually enroll. And they can't ask for your
credit-card or bank data unless you're arranging automatic payments.

No one can
enroll in a drug plan before Nov. 15, though the plans can start
advertising this month. If a plan asks for payment before that date,
it could be fraudulent.

Enrolling in a drug plan is voluntary. If
someone says you must join a plan to avoid losing your other
Medicare benefits, you're getting false information. For free
advice, call your State Health Insurance Program or your local area
agency on aging. For a state-by-state directory of state programs,
visit
www.medicare.gov/contacts/Static/SHIPs.asp
or call Medicare's hotline. To find your local aging agency, go to
eldercare.gov
or call 800-677-1116.

Even with
legitimate plans, advocates for Medicare recipients urge seniors to
study and compare several drug plans before choosing. "What
incentive does a salesperson have to inform a senior that a
competitor's plan might be better for them?" asks Shannon Benton,
executive director of the TREA Senior Citizens League, an
Alexandria, Va., advocacy group.

The Medicare Rights Center developed a flow
chart to help sort through drug-benefit options. To use it, go to
medicareinteractive.org/aarp, then click
on the yellow box on the right side of the screen labeled "New!
Medicare Drug Coverage Information."

Jensen Comment:
Note that the traditional Medicare Supplement Plans (e.g., Plan J) are going
to cease to exist. The trusted place to start for information about new alternative
is
http://www.cms.hhs.gov/default.asp?

The Internal Revenue Service has canceled the
tax-exempt status for some of the nation's largest educational credit
counseling services after audits revealed they exist mainly to prey on
debt-ridden customers, Commissioner Mark Everson said Monday.

"These organizations have not been operating for
the public good and don't deserve tax-exempt status," Everson said. "They
have poisoned an entire sector of the charitable community."

A two-year investigation of 41 credit counseling
agencies resulted in the revocation, proposed revocation or other
termination of their tax-exempt status, he announced.

Everson said that many of those groups,
representing more than 40 percent of the revenue in a $1 billion industry,
offered little, if any, counseling or education as required of groups with
tax-exempt status.

Other such agencies will be required to report on
their activities. The IRS is sending compliance inquiries to each of the
other 740 known tax-exempt credit counseling agencies not already under
audit.

"Depending on the responses received, additional
audits may be undertaken," the agency said.

Everson said groups looking to make a profit would
secure tax exempt status and make cold phone calls to people in desperate
financial straights. They would use scare tactics to sell the people
"cookie-cutter" debt management plans that often were not geared toward
reducing the consumers' debt and often were too costly to pay.
Administrative fees, he said were sometimes collected by third parties
handling the paperwork for a profit.

Everson recommended that consumers pick one of the
150 consumer counseling organizations approved by groups like the Better
Business Bureau. But bad actors may exist even among those, because
guidelines for approval differs between agencies, he said.

Everson added that the agency is following up the
revocations with some criminal investigations, but would not detail them.

The IRS also is issuing new guidance on how to
comply with federal law to legitimate organizations which educate people on
how to maintain good credit.

The agency in recent years has tightened up its
review of new applications by credit counseling firms for tax-exempt status.
Since 2003, the IRS has reviewed 100 such applications and approved only
three.

The actions come consumers and the counseling
industry are having to learn to live under a new and more restrictive
federal bankruptcy law.

Congress last year gave the financial counseling
sector a new role in the nation's bankruptcy system by making it harder for
people to wipe out debt and requiring consumers to consult with an approved
credit counselor before they seek the protection of a bankruptcy court.

Exploiting the Poor

Inside U.S. companies' audacious drive to extract more
profits from the nation's working poor

In recent years, a range of businesses
have made financing more readily available to even the riskiest of
borrowers. Greater access to credit has put cars, computers, credit
cards, and even homes within reach for many more of the working poor.
But this remaking of the marketplace for low-income consumers has a dark
side: Innovative and zealous firms have lured unsophisticated shoppers
by the hundreds of thousands into a thicket of debt from which many
never emerge.

Federal Reserve data show that in
relative terms, that debt is getting more expensive. In 1989 households
earning $30,000 or less a year paid an average annual interest rate on
auto loans that was 16.8% higher than what households earning more than
$90,000 a year paid. By 2004 the discrepancy had soared to 56.1%.
Roughly the same thing happened with mortgage loans: a leap from a 6.4%
gap to one of 25.5%. "It's not only that the poor are paying more; the
poor are paying a lot more," says Sheila C. Bair, chairman of the
Federal Deposit Insurance Corp.

Once, substantial businesses had
little interest in chasing customers of the sort who frequent the
storefronts surrounding the Byrider dealership in Albuquerque. Why
bother grabbing for the few dollars in a broke man's pocket? Now there's
a reason.

Armed with the latest technology for
assessing credit risks—some of it so fine-tuned it picks up spending on
cigarettes—ambitious corporations like Byrider see profits in those thin
wallets. The liquidity lapping over all parts of the financial world
also has enabled the dramatic expansion of lending to the working poor.
Byrider, with financing from Bank of America Corp. (BAC ) and others,
boasts 130 dealerships in 30 states. At company headquarters in Carmel,
Ind., a profusion of colored pins decorates wall maps, marking the 372
additional franchises it aims to open from California to Florida.
CompuCredit Corp., based in Atlanta, aggressively promotes credit cards
to low-wage earners with a history of not paying their bills on time.
And BlueHippo Funding, a self-described "direct response merchandise
lender," has retooled the rent-to-own model to sell PCs and plasma TVs.

The recent furor over subprime
mortgage loans fits into this broader story about the proliferation of
subprime credit. In some instances, marketers essentially use products
as the bait to hook less-well-off shoppers on expensive loans. "It's the
finance business," explains Russ Darrow Jr., a Byrider franchisee in
Milwaukee. "Cars happen to be the commodity that we sell." In another
variation, tax-preparation services offer instant refunds, skimming off
hefty fees. Attorneys general in several states say these techniques at
times have violated consumer-protection laws.

Some economists applaud how the spread
of credit to the tougher parts of town has raised home- and
auto-ownership rates. But others warn that in the long run the
development could slow upward mobility. Wages for the working poor have
been stagnant for three decades. Meanwhile, their spending has
consistently and significantly exceeded their income since the
mid-1980s. They are making up the difference by borrowing more. From
1989 through 2004, the total amount owed by households earning $30,000
or less a year has grown 247%, to $691 billion, according to the most
recent Federal Reserve data available.

"Having access to credit should be
helping low-income individuals," says Nouriel Roubini, an economics
professor at New York University's Stern School of Business. "But
instead of becoming an opportunity for upward social and economic
mobility, it becomes a debt trap for many trying to move up."

HAPPY AS SHE WAS with the Saturn (GM )
she bought in December, 2005, Roxanne Tsosie soon ran into trouble
paying off the loan on it. The car had 103,000 miles on the odometer.
She agreed to a purchase price of $7,922, borrowing the full amount at a
sky-high 24.9%. Based on her conversation with the Byrider salesman, she
thought she had signed up for $150 monthly installments. The paperwork
indicated she owed that amount every other week. She soon realized she
couldn't manage the payments. Dejected, she agreed to give the car back,
having already paid $900. "It kind of knocked me down," Tsosie says. "I
felt I'd never get anywhere."

The abortive purchase meant Byrider
could dust off and resell the Saturn. Nearly half of Byrider sales in
Albuquerque do not result in a final payoff, and many vehicles are
repossessed, says David Brotherton, managing partner of the dealership.
A former factory worker, he says he sympathizes with customers who
barely get by. "Many of these people are locked in a perpetual cycle" of
debt, he says. "It's all motivated by self-interest, of course, but we
do want to help credit-challenged people get to the finish line."

Byrider dealers say they can generally
figure out which customers will pay back their loans. Salesmen, many of
whom come from positions at banks and other lending companies, use
proprietary software called Automated Risk Evaluator (ARE) to assess
customers' financial vital signs, ranging from credit scores from major
credit agencies to amounts spent on alimony and cigarettes.

Unlike traditional dealers, Byrider
doesn't post prices—which average $10,200 at company-owned
showrooms—directly on its cars. Salesmen, after consulting ARE,
calculate the maximum that a person can afford to pay, and only then set
the total price, down payment, and interest rate. Byrider calls this
process fair and accurate; critics call it "opportunity pricing."

So how did Byrider figure that Tsosie
had $300 a month left over from her small salary for car payments?
Barely a step up from destitution, she now lives in her own cramped
apartment in a dingy two-story adobe-style building. Decorated with an
old bow and arrow and sepia-tinted photographs of Navajo chiefs, the
apartment is also home to her new husband, Joey A. Garcia, a
grocery-store stocker earning $25,000 a year, his two children from a
previous marriage, and two of Tsosie's kids. She and Garcia are paying
off several other high-interest loans, including one for his used car
and another for the $880 wedding ring he bought her this year.

Asked by BusinessWeek to review
Tsosie's file, Byrider's Brotherton raises his eyebrows, taps his
keyboard, and studies the screen for a few minutes. "We probably should
have spent more time explaining the terms to her," he says. Pausing, he
adds that given Tsosie's finances, she should never have received a
24.9% loan for nearly $8,000.

That still leaves her $900 in
Byrider's till. "No excuses; I apologize," Brotherton says. He promises
to return the money (and later does). In most transactions, of course,
there's no reporter on the scene asking questions.

A QUARTER-CENTURY ago, Byrider's
founder, the late James F. Devoe, saw before most people the untapped
profits in selling expensive, highly financed products to marginal
customers. "The light went on that there was a huge market of people
with subprime and unconventional credit being turned down," says Devoe's
38-year-old son, James Jr., who is now chief executive.

The formula produces profits. Last
year, net income on used cars sold by outlets Byrider owns averaged $828
apiece. That compared with only $223 for used cars sold as a sideline by
new-car dealers, and a $31 loss for the typical new car, according to
the National Automobile Dealers Assn. Nationwide, Byrider dealerships
reported sales last year of $700 million, up 7% from 2005.

"Good Cars for People Who Need
Credit," the company declares in its sunny advertising, but some law
enforcers say Byrider's inventive sales techniques are unfair. Joel
Cruz-Esparza, director of consumer protection in the New Mexico Attorney
General's Office from 2002 to 2006, says he received numerous complaints
from buyers about Byrider. His office contacted the dealer, but he never
went to court. "They're taking advantage of people, but it's not
illegal," he says.

Officials elsewhere disagree.
Attorneys general in Kentucky and Ohio have alleged in recent civil
suits that opportunity pricing misleads customers. Without admitting
liability, Byrider and several franchises settled the suits in 2005 and
2006, agreeing to inform buyers of "maximum retail prices." Dealers now
post prices somewhere on their premises, though still not on cars. Doing
so would put them "at a competitive disadvantage," says CEO Devoe. Sales
reps flip through charts telling customers they have the right to know
prices. Even so, Devoe says, buyers "talk to us about the price of the
car less than 10% of the time."

Tsosie recently purchased a 2001
Pontiac from another dealer. She's straining to make the $277 monthly
payment on a 14.9% loan.

Nobody, poor or rich, is compelled to
pay a high price for a used car, a credit card, or anything else. Some
see the debate ending there. "The only feasible way to run a capitalist
society is to allow companies to maximize their profits," says Tyler
Cowen, an economist at George Mason University in Fairfax, Va. "That
will sometimes include allowing them to sell things to people that will
sometimes make them worse off."

Others worry, however, that the
widening income gap between the wealthy and the less fortunate is being
exacerbated by the spread of high-interest, high-fee financing. "People
are being encouraged to live beyond their means by companies that are
preying on low-income consumers," says Jacob S. Hacker, a political
scientist at Yale.

Higher rates aren't deterring
low-income borrowers. Payday lenders, which provide expensive cash
advances due on the customer's next payday, have multiplied from 300 in
the early 1990s to more than 25,000. Savvy financiers are rolling up
payday businesses and pawn shops to form large chains. The stocks of
five of these companies now trade publicly on the New York Stock
Exchange (NYX ) and NASDAQ (NDAQ ). The investment bank Stephens Inc.
estimates that the volume of "alternative financial services" provided
by these sorts of businesses totals more than $250 billion a year.

Mainstream financial institutions are
helping to fuel this explosion in subprime lending to the working poor.
Wells Fargo & Co. (WFC ) and U.S. Bancorp (USB ) now offer their own
versions of payday loans, charging $2 for every $20 borrowed. Based on a
30-day repayment period, that's an annual interest rate of 120%. (Wells
Fargo says the loans are designed for emergencies, not long-term
financial needs.) Bank of America's revolving credit line to Byrider
provides up to $110 million. Merrill Lynch & Co. (MER ) works with
CompuCredit to package credit-card receivables as securities, which are
bought by hedge funds and other big investors.

Once, major banks and companies
avoided the poor side of town. "The mentality was: Low income means low
revenue, so let's not locate there," says Matt Fellowes, a researcher at
the Brookings Institution in Washington, D.C. Now, he says, a growing
number of sizable corporations are realizing that viewed in the
aggregate, the working poor are a choice target. Income for the 40
million U.S. households earning $30,000 or less totaled $650 billion in
2004, according to Federal Reserve data.

John T. Hewitt, a pioneer in the
tax-software industry, recognized the opportunity. The founder of
Jackson Hewitt Tax Service Inc. (JTX ) says that as his company grew in
the 1980s, "we focused on the low-hanging fruit: the less affluent
people who wanted their money quick."

In the 1990s, Jackson Hewitt
franchises blanketed lower-income neighborhoods around the country. They
soaked up fees not just by preparing returns but also by loaning money
to taxpayers too impatient or too desperate to wait for the government
to send them their checks. During this period, Congress expanded the
Earned-Income Tax Credit, a program that guarantees refunds to the
working poor. Jackson Hewitt and rival tax-prep firms inserted
themselves into this wealth-transfer system and became "the new welfare
office," observes Kathryn Edin, a visiting professor at Harvard
University's John F. Kennedy School of Government. Today, recipients of
the tax credit are Jackson Hewitt's prime customers.

"Money Now," as Jackson Hewitt markets
its refund-anticipation loans, comes at a steep price. Lakissisha M.
Thomas learned that the hard way. For years, Thomas, 29, has bounced
between government assistance and low-paying jobs catering to the
wealthy of Hilton Head Island, S.C. She worked most recently as a
cashier at a jewelry store, earning $8.50 an hour, until she was laid
off in April. The single mother lives with her five children in a dimly
lit four-bedroom apartment in a public project a few hundred yards from
the manicured entrance of Indigo Run, a resort where homes sell for more
than $1 million.

Thomas finances much of what she buys,
but admits she usually doesn't understand the terms. "What do you call
it—interest?" she asks, sounding confused. Two years ago she borrowed
$400 for rent and food from Advance America Cash Advance Centers Inc. (AEA
), a payday chain. She renewed the loan every two weeks until last
November, paying more than $2,500 in fees.

This January, eager for a $4,351
earned-income credit, she took out a refund-anticipation loan from
Jackson Hewitt. She used the money to pay overdue rent and utility
bills, she says. "I thought it would help me get back on my feet."

A public housing administrator who
reviews tenants' tax returns pointed out to Thomas that Jackson Hewitt
had pared $453, or 10.4%, in tax-prep fees and interest from Thomas'
anticipated refund. Only then did she discover that various services for
low-income consumers prepare taxes for free and promise returns in as
little as a week. "Why should I pay somebody else, some big company,
when I could go to the free service?" she asks.

The lack of sophistication of
borrowers like Thomas helps ensure that the Money Now loan and similar
offerings remain big sellers. "I don't know whether I was more bothered
by the ignorance of the customers or by the company taking advantage of
the ignorance of the customers," says Kehinde Powell, who worked during
2005 as a preparer at a Jackson Hewitt office in Columbus, Ohio. She
changed jobs voluntarily.

State and federal law enforcers lately
have objected to some of Jackson Hewitt's practices. In a settlement in
January of a suit brought by the California Attorney General's Office,
the company, which is based in Parsippany, N.J., agreed to pay $5
million, including $4 million in consumer restitution. The state alleged
Jackson Hewitt had pressured customers to take out expensive loans
rather than encourage them to wait a week or two to get refunds for
free. The company denied liability. In a separate series of suits filed
in April, the U.S. Justice Dept. alleged that more than 125 Jackson
Hewitt outlets in Chicago, Atlanta, Detroit, and the Raleigh-Durham
(N.C.) area had defrauded the Treasury by seeking undeserved refunds.

Jackson Hewitt stressed that the
federal suits targeted a single franchisee. The company announced an
internal investigation and stopped selling one type of
refund-anticipation loan, known as a preseason loan. The bulk of refund
loans are unaffected. More broadly, the company said in a written
statement prepared for BusinessWeek that customers are "made aware of
all options available," including direct electronic filing with the IRS.
Refund loan applicants, the company said, receive "a variety of both
verbal and written disclosures" that include cost comparisons. Jackson
Hewitt added that it provides a valuable service for people who "have a
need for quick access to funds to meet a timely expense." The two
franchises that served Thomas declined to comment or didn't return
calls.

VINCENT HUMPHRIES, 61, has watched the
evolution of low-end lending with a rueful eye. Raised in Detroit and
now living in Atlanta, he never got past high school. He started work in
the early 1960s at Ford Motor Co.'s hulking Rouge plant outside Detroit
for a little over $2 an hour. Later he did construction, rarely earning
more than $25,000 a year while supporting five children from two
marriages. A masonry business he financed on credit cards collapsed.
None of his children have attended college, and all hold what he calls
"dead-end jobs."

Over the years he has "paid through
the nose" for used cars, furniture, and appliances, he says. He has
borrowed from short-term, high-interest lenders and once worked as a
deliveryman for a rent-to-own store in Atlanta that allowed buyers to
pay for televisions over time but ended up charging much more than a
conventional retailer. "You would have paid for it three times," he
says. As for himself, he adds: "I've had plenty of accounts that have
gone into collection. I hope I can pay them before I die." His biggest
debts now are medical bills related to a heart condition. He lives on
$875 a month from Social Security.

Question
If you lost your hotel room's magnetic strip card that opens the door, I'll
just be you thought your were free of all worries when you simply got a
replacement card with a changed code that unlocks the hotel room door. Could
anybody who found or stole your original card still take advantage of you?

Until recently, Las Vegas police
officers couldn't figure out why some of the prostitutes and drug addicts
they arrested were found carrying multiple hotel room keys and slot machine
player's club cards. When confronted, the suspects said they kept them as
souvenirs or found them on the sidewalk. The cops initially assumed that the
cards were stolen, or -- in the case of the prostitutes -- perhaps belonged
to some of their more frequent clients.

"It was getting fairly regular that in post-arrest
inventory, we would find eight to 10 room key cards ... all from different
hotels," said
Dennis Cobb, deputy chief of the
Las Vegas Metropolitan Police Department's Technical Services
Division.

The mystery began to unravel when a LVMPD officer
slid one of the keys through a machine that reads the data stored on the
card's magnetic stripe. Each swipe revealed a 16-digit credit number, a
date, a person's name and the name of a bank. That's right, the keys
functioned exactly like credit cards, allowing the carrier to pay for
merchandise at any store or market where customers do their own swiping.

"The people who had these cards on them were using
them in transactions with local businesses," Cobb said.

The revelation is hardly a surprising one for a
city that had
the nation's second highest rate of identity-theft complaints
to the Federal Trade Commission last year. Cobb said the
stolen card data comes from a variety of sources, but he said it is not
unusual for service-industry workers who owe money to a drug dealer or a
bookie to be handed a handheld magnetic stripe "skimmer"
and ordered to periodically collect up to 100 accounts as a means of erasing
their debt.

Hal
Berghel, the center's director, said the
people who are usually caught with key cards use them primarily at
convenience stores, gas stations and other places where purchases are less
than $20, which is below the scrutiny threshold for most fraud-detection
technologies.

"By the time the bottom feeders get the cards, the
data on them has already been shared with the organized criminals, who will
bang on a credit card though mail-order and Internet purchases," Berghel
said. At that point the cards are "throwaways that can only be used a couple
of times before they're canceled."

Last year, Berghel filed a patent application on
behalf of IFFROC for a technology called "Cardsleuth," software he demoed
for me when we met up last week in Washington. He hopes that one day a
pen-sized device will be used to read magnetic stripes and alert the user
when unexpected data is found. Berghel and his team are working on a
prototype, which he said could be updated periodically via a USB-based
docking station.

Berghel said the technology could be especially
useful in the case of a 9/11-type emergency by helping authorities
distinguish first responders from those individuals -- be they terrorists or
merely looters -- who might take advantage of a chaotic environment.

"There is still a need for on-the-spot validation
of credentials where you have a convergence of emergency workers, many of
whom have never seen each other before," he said.

Update, 11:45 a.m. ET: Apparently,
I didn't make it clear enough what is really going on here. This post is not
suggesting that hotel room keys are being encoded with credit card
information by the hotels, which has always been something of an urban
legend/e-mail hoax (see
Snopesand
previous discussions on Slashdot.) The folks I
interviewed for this piece said the encoding was being done by the criminals
(or more specifically, fraud rings who sold them to street hustlers who
would wring every last dollar out of the cards before they were cancelled).
From the crooks' perspective, the idea behind this is to be able to
anonymously use someone else's credit card at a physical location; someone
who got arrested holding someone else's actual credit card would have a lot
of explaining to do, but hotel room keys are likely to be overlooked or set
aside for what they appear to be.

School Tax Scams

Organized Crime is Stealing From Your Children (With the
Help of Top School Officials)The last thing people want to hear in a high-tax state
notorious for political corruption is that their tax dollars are being
mismanaged. But according to a two-year probe of school superintendents by New
Jersey's State Commission of Investigation, that's exactly what's going on in
Tony Soprano country. No wonder there's a property-tax rebellion brewing there
as in many places around the country.
"Jersey School Scam," The Wall Street Journal, March 21, 2006; Page
A14 ---
http://online.wsj.com/article/SB114290632601803676.html?mod=opinion&ojcontent=otep

The report -- "Taxpayers Beware: What You Don't
Know Can Cost You" -- sampled 71 of New Jersey's more than 600 school
districts and found a pattern of "questionable and excessive" practices that
included boosting salaries and padding pensions surreptitiously and in ways
that have cost unsuspecting taxpayers millions of dollars. A school chief in
Ocean County was paid nearly $350,000, or 65% more than he reported to the
Department of Education. A Camden official received $223,000, which included
$43,000 in undisclosed bonuses, car expenses and an annuity. And a Bergen
County superintendent received more than a half-million dollars in extra pay
for unused sick time and other benefits.

According to the report, if these perks were
disclosed at all they were in the minutiae of contracts rather than in
reported salaries. "If a school board wants to pay a superintendent
$300,000, fine," wrote the Newark Star-Ledger, a paper that typically favors
higher taxes and spending. "But taxpayers shouldn't be told the salary is
$200,000 and given no clue that the total package makes the compensation 50
percent higher."

That outrage is welcome, if also belated given that
schools in New Jersey are mostly financed with local property taxes, which
are among the highest anywhere and nearly double the national average.
According to the latest Census data, average New Jersey property levies were
$1,908 in 2002, well ahead of second-place New York ($1,760). They've since
risen rapidly along with the real-estate boom -- enough so that both
candidates in last year's race for governor promised to cut property taxes.

But Jerseyites shouldn't spend their refund checks
anytime soon. New Governor Jon Corzine promised to increase property-tax
rebates, but he's already backtracking. He's suddenly using phrases like
"shared sacrifice," which means higher taxes for as many people as possible.
Only two years ago, former Governor James McGreevey raised the top marginal
income-tax rate to 8.97% from 6.37%, making it the fifth-highest in the
country. New Jersey's revenues have grown by an average of more than 8%
annually since 2002, but the politicians keep spending more: $28 billion
last year, up from $20 billion in 2000 and $12 billion in 1990.

By the way, those absurd superintendent contracts
were negotiated by school board members chosen in elections held in April,
when no one votes. "If you think the superintendent contracts are bad," says
Gregg Edwards, a former school board member who now runs New Jersey's Center
for Policy Research, "wait until you get into the teachers contracts. And
it's not just the money. It's the work rules."

The few who do bother to vote for school board
members -- typical turnout is 10% -- tend to be union activists and others
who have direct connections to the bureaucracy and no incentive to clean up
this mess. If New Jersey is looking to reform, a good first step might be to
elect school board members in November. The alternative is to keep getting
scammed by these public-sector union contracts.

Consumers Beware of Unsuspected Automatic Billings

From The Wall Street Journal Accounting Weekly Review of February 24,
2006

SUMMARY: The article describes issues consumers face in stopping automatic
payment arrangements. "...Consumers don't always know and follow the rules for
recurring payments, and banks say they aren't able to cancel recurring
credit-card charges when a consumer has signed a long-term contract with a
merchant..." In addition, consumers must devote significant time to resolving
issues. Accounting topics arise because the article uses the terms debit and
credit; questions ask students to understand the use of these terms in banking
transactions.

QUESTIONS:
1.) The article differentiates between debit card or bank account transactions
and credit card transactions. What is the difference between a debit card and a
credit card? How is a debit card similar to a checking account?

2.) What are the issues in resolving payment disputes on automated payment
plans? Why do the issues differ between debit cards or bank accounts used for
automated payments and automated charges to credit cards?

3.) The article uses the terms credit and debit in the title and other
places, such as the statement that "Nancy Burleson's checking account was
debited an extra week's mortgage payment..." Do these uses of the terms debit
and credit correspond to the use of those terms in the balance sheet equation?
Support your answer.

4.) Refer again to the statement quoted in question 3 about debiting a
checking account. Describe how a customer checking account is classified on a
bank's balance sheet, including a definition of the term "demand deposit."
Explain how a demand deposit account is increased (with a debit or a credit?)
and decreased (again, with a debit or a credit?).

5.) How is a customer credit card account balance (say, on a MasterCard or
Visa account) classified in a bank's balance sheet? Explain how the account
balance is increased (with a debit or a credit?) and decreased (again, with a
debit or a credit?)

Tens of millions of Americans with checking, savings
and credit card accounts are learning first-hand the meaning of what MSNBC.com
columnist Bob Sullivan calls “gotcha capitalism.” It’s a modern variation on the
Chinese “death by a thousand cuts.” Banks and other financial institutions in
recent years have raised existing fees to dramatic heights, imposed a broad
range of new fees, doubled and even tripled interest rates on credit cards
without prior warning and otherwise put the squeeze on unsuspecting customers .
. . Capitalism’s superiority over socialism by now ought to be an accepted fact.
An economy only can function under a system of contractual exchange between
buyer and seller, a relationship that socialism at best grudgingly concedes or
denies altogether. Yet for precisely this reason, capitalism can be sustained
only through a high degree of public trust. When trust breaks down, offending
firms and industries must rebuild their reputation to remain competitive. The
banking industry, to make a long story short, has a credibility problem right
now. Carl Horowitz, "Banks Go 'Gotcha!'," FrontPage, August 1, 2009 ---
http://townhall.com/columnists/CarlHorowitz/2009/08/01/banks_go_gotcha

Wow! It's hard to believer PayPal will go this far in protecting eBay
customers
Can PayPal continue to afford this kind of protection?On June 20, eBay announced that it will fully
reimburse buyers and sellers when transaction problems arise, providing they
use eBay’s PayPal payment service. That means eBay will foot the bill when,
say, a buyer purchases an item that was misrepresented on the site or not
sent. So, if that too-good-to-be-true bargain Gucci bag turns out to be a
cheap knockoff, eBay will give the buyer a refund. The additional
protections will go into effect this fall. “We’re combining the power of
eBay and PayPal to give all buyers and sellers more confidence and trust,”
said Lorrie Norrington, eBay’s president of Marketplace Operations in a
statement. “Buyers who pay with PayPal on eBay will be covered, with no
limits, on most transactions.” Catherine Holahan, Business Week, June 19, 2008 ---
http://www.businessweek.com/the_thread/techbeat/archives/2008/06/post_7.html?link_position=link3

Experienced eBay users swear by it, as one has more
recourse in the event of problems.

An experienced friend also tell me that it's a good
idea to open a new bank account specifically for PayPal purposes. The reason
is that you can move newly deposited funds to an account beyond PayPal's
reach. I'm told this prevents PayPal from sequestering your funds in the
event of a late protest by the source of the funds.

Geo

There is a long history of questions about university sponsorship of
credit and/or debit cards with alumni and students, sponsorships with
kickbacks such as a percentage kickback on purchases

WASHINGTON -- The Consumer Financial Protection
Bureau announced Thursday that it was beginning an
inquiry into the arrangements between colleges,
banks and debit card companies. The announcement is the latest indication
that federal agencies and Congress are taking an increased interest in how
debit cards are used to access federal financial aid.

The bureau is asking for input on a few separate
topics: debit cards supplied by companies like Higher One, which give
students the money left over from grants and loans after paying tuition;
arrangements between colleges and banks that allow student identification
cards to be used as debit cards; and college-affiliated bank accounts.

College business officers say those products are
quite different from one another. Preloaded debit cards have caught on in
recent years as a method of giving college students access to federal grants
and loans for living expenses. While they have come under scrutiny for high
fees, they are a way to give money to students without using paper checks,
and do not require a bank account. Critics say students would be better off
opening a bank account than relying on preloaded cards.

Higher One has dominated the debit card market for
years, and has come in for much of the criticism for swipe fees, ATM fees
and other charges that can chip away at students’ financial aid. As the
cards have grown more popular, other banks, including Sallie Mae, have
entered the market place.

Agreements between colleges and banks are more
common at larger universities, unlike the debit cards, which are more
popular at community colleges, said Anne Gross, vice president for
regulatory affairs at the National Association of College and University
Business Officers. Under the agreements, banks offer benefits to colleges,
such as additional scholarship money. In exchange, the colleges offer
students the option of using their ID cards as a debit card, encouraging
them to use that bank for their checking accounts.

The consumer protection agency appears concerned
that those arrangements can stop students from shopping around for bank
accounts that might offer a better deal. Past investigations, including one
by New York Attorney General (now Governor) Andrew Cuomo in 2007, found that
"preferred
lender" arrangements between colleges and student
lenders (until the conversion away from bank-based lending in 2010)
sometimes led to deals that included benefits for colleges but weren't the
best option for students.

Anyone who has recently applied for a mortgage
knows that lenders are already looking much more closely at your financial
affairs. But soon, they’ll be able to easily delve into the deepest recesses
of your financial life, accessing information that never before appeared on
your credit report.

This week, a company called CoreLogic introduced a
new type of credit file, which is based on the giant repository of consumer
data it maintains on just about everything that most of the traditional
credit bureaus do not: missed rental payments that have gone into
collection, any evictions or child support judgments, as well as any
applications for payday loans, along with your repayment history.

The new report also includes any property tax liens
and whether you’ve fallen behind on your homeowner’s association dues. It
may reflect that you now owe more than your house is worth or if you own any
other real estate properties outright. It also is supposed to catch
mortgages made by smaller lenders that the big credit bureaus may have
missed.

The idea, CoreLogic says, is to provide lenders
with more details about prospective borrowers, supplementing what they
already know through the more traditional credit reports furnished by the
big three credit bureaus, Equifax, Experian and TransUnion. Moreover,
CoreLogic has formed a partnership with FICO — the provider of one of the
most popular credit scores used by lenders — which will formulate a new
consumer score based on the new data.

Perhaps it’s not surprising that a company decided
to pull together this information, since much of it is already publicly
available. But because it comes on top of all the other information that’s
being collected about you — your exact location at every minute, where
you’ve been on the Web — you can’t help but feel that some of these
companies know more about your activities than your spouse.

While the CoreScore credit report became available
to all types of lenders on Wednesday, the actual score, which will be ready
in March, is being created specifically for mortgage and home equity
lenders, though it could eventually be developed for other types of credit.

For many consumers, the files are likely to reveal
black marks that previously went undetected, which may damage an otherwise
clean record. But the companies contend that it works both ways: The added
information could help consumers with thin credit files by illustrating
positive behaviors elsewhere, say making timely rent payments.

So why now? Clearly, the two companies saw a
business opportunity. Lenders, who just a few years back looked the other
way, remain particularly skittish about mortgage lending and are looking for
more information about prospective borrowers’ ability to pay their debts.

“Lending is very constrained and origination
volumes need to grow to make for a profitable mortgage business,” said
Joanne Gaskin, director of product management global scoring at FICO. “So
lenders are looking for ways to expand, but to expand safely.”

An estimated 100 million American consumers will
have a CoreScore credit report, while more than 200 million people have
traditional reports from the big three bureaus. Though the new information
can influence a lender’s decision, the new score isn’t replacing the classic
scores used in the automated mortgage underwriting systems kept by Fannie
Mae, Freddie Mac or the Federal Housing Administration, which buy or back
the vast majority of mortgages (though CoreLogic said it has let the
agencies know what it is doing). But the added information may sway a lender
to charge you more (or less) in interest on a mortgage. Lenders of all
stripes, including auto lenders, have access to the reports, and they will
be marketed to employers and insurers, too.

Ms. Gaskin said that FICO was still tweaking the
credit score’s formula. But the next step is to build something that will
try to get even deeper inside your financial mind: The company plans to
create a more sophisticated tool that will predict how you might behave
under different loan terms.

The reason all of this is such a big deal,
according to John Ulzheimer, president of consumer education at
SmartCredit.com, is that CoreLogic already has major inroads with many
lenders. When lenders want to pull your credit file, they go to a company
like CoreLogic, which collects all three reports from the traditional
bureaus, cleans them up a bit and merges them into a more user-friendly
report. “They already have this massive market of mortgage companies that
buy these credit reports from them,” he said. “It’s not like they have to go
out and convince the companies to work with them.”

I stumbled upon your list of threads on Trinity's website about frauds and
scams... WOW, what a valuable collection of info you have assembled over the
years!! I actuallyown and
operate a message boardthat has a large chunk
dedicated to dealing with credit card fraud and financial ripoffs and I was
wondering if you would consider including CreditCardForum as a resource on
your list? In addition to the fraud section on my forum, you will see that I
blog frequently on there about credit scams and sneaky marketing. For
example,
here's a recent postI wrote highlighting the
shady practices behind the govt mandated AnnualCreditReport website.

Thanks and I hope life is treating you well since retiring to NH... a
beautiful area for sure!

Mike

The WSJ is often my best source when I look for fraud reports and fraud
warnings.

Although Paul Williams likes to put down the Wall Street Journal, I
like to give some credit where credit is due.
The WSJ is making money at a time when most other newspapers are failing, and
this allows the WSJ to afford some of the best reporters in the world, many of
whom pride themselves on their independence and integrity.

Here is an old example followed by a new example.

Old Example
A dogged WSJ reporter deserves credit for the the first public arrow that
eventually brought down Enron's house of cards. If the WSJ was overly concerned
about the welfare of the largest corporations in the U.S., this reporter or his
employer would've buried this report.A WSJ reporter was the first to uncover Enron's secret "Related Party
Transactions." What reporter was this and what are those transactions that
he/she investigated?
Answer ---
http://www.trinity.edu/rjensen/FraudEnronQuiz.htm#22

Amid all the junk mail pouring into your house in
recent months, you might have noticed a solicitation or two for a
"professional card," otherwise known as a small-business or corporate credit
card.

If so, watch out. While Capital One Financial
Corp.'s World MasterCard, Citigroup Inc.'s Citibank CitiBusiness/AAdvantage
Mastercard and the others might look like typical plastic, they are anything
but.

Professional cards aren't covered under the Credit
Card Accountability and Responsibility and Disclosure Act of 2009, or Card
Act for short. Among other things, the law prohibits issuers from
controversial billing practices such as hair-trigger interest rate
increases, shortened payment cycles and inactivity fees—but it doesn't apply
to professional cards (see table).

Until recently professional cards largely had been
reserved for small-business owners or corporate executives. But since the
Card Act was passed in March 2009, companies have been inundating ordinary
consumers with applications. In the first quarter of 2010, issuers mailed
out 47 million professional offers, a 256% increase from the same period
last year, according to research firm Synovate.

The Card Act's strictures have squeezed banks'
profits and their ability to operate freely. By moving cardholders out of
protected consumer cards and into professional cards, banks might recoup
some of the revenue they have lost.

"By pushing professional cards to consumers who
otherwise wouldn't want them, card issuers can get around some of the
provisions of the Card Act," says Josh Frank, a senior researcher at the
Center for Responsible Lending, a consumer group.

Several solicitations from J.P. Morgan Chase & Co.
have ended up in the mailbox of John and Gloria Harrison, a retired military
couple who live in Destrehan, La., outside New Orleans. Mrs. Harrison says
she gets an offer for an Ink From Chase card, geared toward small
businesses, almost every month. She says she finds this puzzling because her
husband retired in 1986 and doesn't own a business.

Don't Believe Everything Advertised Widely on TV
FreeCreditReport.com is a Scam! ---
http://www.consumerismcommentary.com/2006/11/16/freecreditreportcom-is-a-scam/This isn’t the first time, but now the State
of Florida Office of the Attorney General is investigating FreeCreditReport.com.
You’ll notice I don’t link to the site. This site, run by credit reporting
agency Experian is taking advantage of the ruling that anyone can receive a free
annual credit report from each of the three major agencies. FreeCreditReport.com
is not the website that offers free credit reports in conjunction with this
directive. It’s misleading, and here’s the fine print on the site:

When you
order your free report here, you will begin your free trial membership in
Triple AdvantageSM Credit Monitoring. If you don’t cancel your membership
within the 30-day trial period, you will be billed $12.95 for each month
that you continue your membership. If you are not satisfied, you can cancel
at any time to discontinue the membership and stop the monthly billing;
however, you will not be eligible for a pro-rated refund of your current
month’s paid membership fee.

Your
FICO credit score is crucial to your credit to your good name. It can
be altered without your knowing it due to fraud and errors. Getting a
free credit report may not give you a FICO scores as well. The main
advantage of thefrom
http://www.myfico.com/ is that it will give you your FICO score from
each of the three major credit reporting agencies. Consumer Reports
(August, 2005, Page 18) notes that credit scores nearly always differ
between the three major credit reporting agencies. You may miss
something if you only get one agency’s score.

To
monitor your FICO score, Consumer Reports (August 2005, Page 17)
recommends that you get the $44.85 package from
http://www.myfico.com/

That
some bankers have ended up in prison is not a matter of scandal, but what is
outrageous is the fact that all the others are free.Honoré
de Balzac

I’m
certain that most of you were overjoyed that you no longer have to pay to track
your credit ratings and your FICO scores. In
the past few weeks I’ve stressed the bad things credit card companies are
doing with FICO scores and the misleading advertising funded by credit card
companies.

Capital
One is the worst abuser with misleading advertising and was so noted in a CBS
module on 60 Minutes.Capital One advertises a fixed rate or a variable rate pegged to the
prime rate.But either original rate
will more than double with an epsilon increase in your FICO score.Or as one reporter put it, your Capital One rate will double if you
sneeze.Another Capital One TV
advertisement that irks me is the one that promises “no blackout dates” for
airline free miles when you use a Capital One card.Blackout dates are an insignificant problem when cashing in frequent
flyer miles.The problem is that
literally all flights have a limited number of seats (usually less than 7% of
the seats on any flight) allocated for frequent flyer redemption.Your Capital One card will not give you priority when fighting for one of
the very limited number of seats, but Capital One does not tell you this unless
it is in such small print that you couldn’t read it with the Hubble telescope.

'You might have less-than-perfect credit and we're
OK with that," read an October credit-card solicitation from South
Dakota-based First Premier Bank. The interest rate, however, will strike
some as usurious: 79.9%. That's a more than eightfold increase from the 9.9%
the bank previously collected for a similar card.

Wait, wasn't Congress supposed to have passed
legislation against predatory lending? As a matter of fact, yes. The
whopping rate increase is First Premier's way of complying with the Credit
Card Accountability, Responsibility and Disclosure Act of 2009. Among other
provisions, that law prohibits fees of more than 25% above a card's credit
limit. First Premier has been offering an account with a $250 limit and
annual fees of $256. By law the latter figure must come down to $75. To
compensate for the lost $181 in fees, the bank is raising the rate by 70% of
$250, or $175, a year.

If it sounds like a rotten deal either way, it
is—if you have good credit. But if you don't, the cost may be worth it to
re-establish your rating. Banks that lend money to customers with poor
credit histories have to charge more to cover the extra risk. If Congress
makes this impossible, banks will respond by refusing to lend to such
customers, so that it will be harder for them to re-establish their
creditworthiness.

Banks can't be expected to give money away, even if
Congress is in the habit of doing just that. Unlike lawmakers, banks and
other businesses can collect revenues only by offering something of value in
return.

Jensen Comment
There are no easy answers to this dilemma. Having national FICO credit scoring
made it "nearly impossible" for persons with bad credit scores to borrow money
from anybody other than loan sharks (who sometimes break knee caps to collect).
The one exception was when borrowers and their brokers submitted falsified
credit applications such as in the case of subprime home mortgages where poison
loans were passed on to Fannie Mae and Freddie Mack, but for those exceptions
the mortgage brokers had to lie about borrower income, property values, and
credit history of the borrower.

And now borrowers with bad FICO scores find themselves in Catch 22 situations
when trying to reestablish higher credit scores. There are all sorts of
unfavorable consequences such as mortgage foreclosures, divorce, sending
children to foster homes, gambling, prostitution, robberies, suicides, seeking
out loan sharks, etc.

The Next Meltdown: Credit-Card Debt:

Chase Bank raised my rate from 8.99 to 30% for no
reason—my reward for being a pristine customer. These are the same bullies that
used to take your lunch money in first grade.Jessica Silver-Greenberg, "The Next Meltdown: Credit-Card Debt:
Rising rates are accelerating credit-card defaults and soured debt could further
undermine the financial system," (video included), Business Week, October
9, 2008 ---
http://www.businessweek.com/magazine/content/08_42/b4104024799703.htm

The troubles sound familiar. Borrowers falling
behind on their payments. Defaults rising. Huge swaths of loans souring.
Investors getting burned. But forget the now-familiar tales of mortgages
gone bad. The next horror for beaten-down financial firms is the $950
billion worth of outstanding credit-card debt—much of it toxic.

That's bad news for players like JPMorgan Chase (JPM)
and Bank of America (BAC) that have largely sidestepped—and even benefited
from—the mortgage mess but have major credit-card operations. They're hardly
alone. The consumer debt bomb is already beginning to spray shrapnel
throughout the financial markets, further weakening the U.S. economy. "The
next meltdown will be in credit cards," says Gregory Larkin, senior analyst
at research firm Innovest Strategic Value Advisors. Adds William Black,
senior vice-president of Moody's Investors Service's structured finance
team: "We still haven't hit the post-recessionary peaks [in credit-card
losses], so things will get worse before they get better." What's more, the
U.S. Treasury Dept.'s $700 billion mortgage bailout won't be a lifeline for
credit-card issuers.

The big firms say they're prepared for the storm.
Early last year JPMorgan started reaching out to troubled borrowers, setting
up payment programs and making other adjustments to accounts. "We have seen
higher credit-card losses," acknowledges JPMorgan spokeswoman Tanya M.
Madison. "We are concerned about [it] but believe we are taking the right
steps to help our customers and manage our risk."

But some banks and credit-card companies may be
exacerbating their problems. To boost profits and get ahead of coming
regulation, they're hiking interest rates. But that's making it harder for
consumers to keep up. That'll only make tomorrow's pain worse. Innovest
estimates that credit-card issuers will take a $41 billion hit from rotten
debt this year and a $96 billion blow in 2009.

Those losses, in turn, will wend their way through
the $365 billion market for securities backed by credit-card debt. As with
mortgages, banks bundle groups of so-called credit-card receivables,
essentially consumers' outstanding balances, and sell them to big investors
such as hedge funds and pension funds. Big issuers offload roughly 70% of
their credit-card debt.

But it's getting harder for banks to find buyers
for that debt. Interest rates have been rising on credit-card securities, a
sign that investor appetite is waning. To help entice buyers, credit-card
companies are having to put up more money as collateral, a guarantee in case
something goes wrong with the securities. Mortgage lenders, in sharp
contrast, typically aren't asked to do this—at least not yet. With consumers
so shaky, now isn't a good time to put more skin in the game. "Costs will go
up for issuers," warns Dennis Moroney of the consultancy Tower Group.

Sure, the credit-card market is just a fraction of
the $11.9 trillion mortgage market. But sometimes the losses can be more
painful. That's because most credit-card debt is unsecured, meaning
consumers don't have to make down payments when opening up their accounts.
If they stop making monthly payments and the account goes bad, there are no
underlying assets for credit-card companies to recoup. With mortgages, in
contrast, some banks are protected both by down payments and by the ability
to recover at least some of the money by selling the property.

THE BIG BOYS' BURDEN Making matters worse, the
subprime threat is also greater in credit-card land. Risky borrowers with
low credit scores account for roughly 30% of outstanding credit-card debt,
compared with 11% of mortgage debt. More than 45% of Washington Mutual's
credit-card portfolio is subprime, according to Innovest. That could become
a headache for JPMorgan Chase, which agreed on Sept. 25 to buy the troubled
thrift's credit-card business and other assets for $1.9 billion. Says a
JPMorgan spokeswoman: "

The Latest Target of Thieves When Brad Lipman took
his family out for dinner in July 2006, he had no idea it would end up
costing him $1,800. Lipman paid for the $60 meal with his debit card. After
the waiter took the card, someone swiped it through a portable "skimmer."
This handheld electronic device allowed the thief to copy Lipman's account
information and security codes, and clone his card.

Over the following week, the culprit drained
Lipman's checking account and tapped into his overdraft line. He didn't
realize anything was amiss until his credit union called him about some
unusual charges. "It's hard to explain the feelings of violation," says
Lipman, 40, owner of a lending company in Thousand Oaks, California.
"Someone had their hand directly in my money."

Many people wrongly assume that debit cards offer
the same protection against fraud as credit cards. But when a debit card is
stolen or copied, there's no grace period while you contest the charges.
Your cash has already been electronically zapped from your checking account.
And if it falls short, as Lipman's did, you could face expensive overdraft
charges that your bank isn't required to repay.

Debit cards have overtaken credit cards as
Americans' plastic of choice for in-store transactions—33 percent debit,
compared with 19 percent credit. Financial experts often recommend them as a
money-management tool. Three years from now, debit card use will account for
more than half our retail purchases, according to the Nilson Report, a
payment-systems industry publication.

Debit cards have become the latest target of
thieves, and it's not just random cases like Lipman's. In early 2007,
hundreds of customers of a national chain restaurant in Sioux City, Iowa,
learned their debit card numbers had been stolen. Thieves made cloned cards
and are using them in stores in California and northern Mexico. And in 2006,
the TJX Companies, which owns T.J. Maxx and Marshalls, reported one of the
largest customer-data breaches ever: 45.7 million debit and credit card
numbers were stolen from the retailer's computer systems over an 18-month
period. Authorities still don't fully know the scope.

There's little you can do to predict a mass retail
theft. But you can be smarter about how you use your card to avoid these and
other common pitfalls. In addition to scams, hidden overdraft fees are at an
all-time high, not to mention surprise holds and mismanagement traps that
could land your account in the red faster than the ATM can spit out your
receipt.

Know When to Hold 'Em

When Ann Agent of Portland, Oregon, was planning to
attend a children's book publishing conference in Tulsa, Oklahoma, she
booked her hotel room over the phone by debit card. She and three colleagues
intended to split the bill and each pay the hotel directly at checkout time.

Two days into the conference, Agent's husband
called from home to read her a letter from her bank: Her checking account
was overdrawn, and she was being charged $35 a day in overdraft fees. "I
thought there had to be a mistake," Agent, 45, says. "I keep close track of
my account balance."

Turns out when Agent reserved the room, the hotel
"blocked," or held, enough money in Agent's account to cover the entire four
nights' stay, plus miscellaneous charges, amounting to $580. This blocked
every available penny she had and caused her to overdraw. The charges
weren't reversed until Agent returned home the following Monday.

Holds are common practice in the travel and
hospitality industry. They're the merchant's way of ensuring you'll pay your
bill. If you rent a car, the agency could block several thousand dollars to
make sure you return the vehicle. Some restaurants will place debit card
holds for large parties, and a friendly bartender can put a hold on your
card if you start a tab. The hold is usually removed within five business
days, sometimes much sooner.

Gas stations are notorious for holds. On a Friday
morning in January 2005, Jessica Hathaway of Allentown, Pennsylvania, bought
$22.29 of gas by debit. On Saturday, the 34-year-old single mother of three
checked her bank balance and learned she was almost broke. Right before the
gas station debited Hathaway's account for the gas, it imposed a $75 block.

"I was living paycheck to paycheck. I didn't have
much extra in my account, and this $75 charge worried me all weekend," she
says. Hathaway was out of luck—and cash—until the following Tuesday, when
her bank released the hold.

The kind of hold Hathaway described is a standard
preauthorization for signature (non-PIN) transactions. Stations vary widely
in their hold amounts. Because Hathaway bought gas before the weekend, her
hold may have taken longer than usual to clear.

Avoid the Trap

Leave your debit card at home when traveling.
"People should use a credit card, even if they don't any other time,"
advises Clark Howard, consumer advocate and radio host of The Clark Howard
Show. Never use a debit card any place your card is taken out of sight, like
a restaurant. Book dinner reservations on a credit card. If you must use
debit at a gas station—a hot spot for skimming—use your PIN inside or at the
pump. Your card is safest if it stays in your hand, and typing in a PIN
eliminates the hold.

Be Wary on the Web Say you buy an MP3 player for
$80 through an Internet discounter. You wait two weeks. Your music player
never arrives, and now the seller is nowhere to be found.

If you used your credit card to buy the player,
you've got options. Under the terms of the Fair Credit Billing Act, your
card company must remove the questionable charge from your bill while it
investigates. The law says you're liable for up to $50, but you'll most
likely end up owing nothing.

If you paid by debit card, you're doubly out of
luck: no pocket tunes for you, and your money is already gone. Under the
Electronic Fund Transfer Act, your debit card issuer isn't required to step
in if you make a deal with an unscrupulous merchant. You get to wrangle with
the seller yourself, no matter what your bank promised when you opened your
account.

Then there's the fraud issue. Federal law generally
limits your liability to no more than $50 if your debit card is stolen or
copied, as long as you report the crime within two days of receiving your
statement. However, if you don't notice the suspicious activity till weeks
later, you may be liable for up to $500 or more. As with transaction
disputes, recouping your cash isn't a sure thing.

Avoid the Trap

Don't use debit for online purchases, especially if
you don't know the retailer's reputation, says Avivah Litan, electronic
security specialist for Gartner, an information technology research firm
that works with banks. Also opt for credit for all expensive items, like
furniture.

Fraud is trickier because it can strike even if
you're careful. Nessa Feddis, a senior federal counsel to the American
Bankers Association, recommends checking your printed statements every
month. Better yet, register for online banking and track your money trail
even more frequently.

Some card issuers offer zero liability policies,
meaning they won't hold customers responsible for even that first $50 in
fraud charges. But they are not legally bound to do so. "We get calls from
listeners who struggle for weeks to get their own money back," notes Howard.
Even if a store's card reader prompts for your PIN, you can override the
system by pressing Credit/Other or asking the cashier to process the sale
that way. When you sign a receipt, your debit transaction piggybacks on the
credit card processing system, triggering the zero liability policy to kick
in.

Steer Clear of Hidden Fees At the end of the week,
most of us pull a wad of debit receipts out of our wallets and purses. Do we
religiously record these amounts? Probably not. And even a $5 purchase can
cause you to overdraw if your balance is tight.

"Banks sometimes change the order of transactions
at night. They take your biggest transactions and run them first," says Ed
Mierzwinski, consumer program director at the U.S. Public Interest Research
Group. By manipulating the order of checks and debits, banks can cause you
to overdraw sooner and more often than you thought, earning huge overdraft
fees for themselves. Debit purchases and withdrawals are now the single
largest cause of customer overdrafts, according to the Center for
Responsible Lending (CRL). "Five years ago, if you didn't have enough money
in your account to buy something, your card would be declined," says Leslie
Parrish, a CRL senior researcher. Today banks extend "courtesy overdraft
loans," the financial euphemism for letting you overdraw and then charging
you for it. Charges average $34 per transaction and add up to an estimated
$17.5 billion in annual fees for financial institutions, says the CRL.

Avoid the Trap

Link your checking account to another account in
case you overdraw. The fee, if any, is much lower than overdraft loans. If
you incur fees, banks will often waive them if you ask. Some banks offer
e-mail or text-message alerts if your balance gets too low. That could be a
warning that someone has copied your card or charged you incorrectly.

What's Next?

If you thought debit cards were popular now, just
wait. The young tech-savvy generation is entering its prime earning and
spending phase of life, and they live by their debit cards.

All the more reason for debit card security to step
up a notch. Brad Lipman, the man who lost $1,800 at a restaurant (his credit
union eventually returned his money, including overdraft fees) was inspired
to develop TablePay, a device that allows diners to safely swipe their debit
cards right at their tables. Before long, U.S. debit card issuers may embed
electronic chips in cards' magnetic strips, predicts Litan, the security
specialist. These sophisticated cards are much harder to copy and use
fraudulently.

And that's good, since even fraud victims like
Lipman aren't willing to part with their debit cards. "I just can't give up
the convenience," he says.

How to avoid those huge debit card fees?Debit cards may seem attractive to consumers who want
to avoid racking up credit charges, because they appear to have the safeguard of
drawing from your checking account. But it is possible to overdraw from your
debit card, and the resulting fees are very high. Here's how to avoid such
charges.
Michelle Singletary, "Watch Your Debit Card Balance," NPR, July 31, 2007
---
http://www.npr.org/templates/story/story.php?storyId=12374687

I stumbled upon your site looking for finance
resources--I recently graduated college and am just starting to stand on my
own feet financially. This is also my first year that I'll be paying taxes,
so all your IRS info was especially appreciated! I actually wanted to
suggest a site that your readers might be helpful: I've been consulting
bankaholic.com quite a bit, and I've found their information to be quite
good. I've read their section on comparing credit cards over and over again!
Just a thought!

Answer
Using such cards is now a bad deal relative to cards that provide cash discounts
on nearly all purchases. In the past this added mileage from credit cards was a
good deal and helped Erika and I get a number of free trips to Europe and
elsewhere. Now these airline-miles credit cards are more of a scam, especially
cards that charge an annual fee. The problem is the increased barriers airlines
are putting up for redemption of the miles, especially the almost certain
likelihood that one or more legs of your planned itinerary will not have free
seating available.

My advice:
Get a free credit card that offers cash discounts on almost all purchases. Shop
around! There are some good deals in this regard and bad deals for airline
miles. The airlines now have trillions in outstanding free mile liabilities for
free miles that they are increasingly being creative on how to avoid providing
free redemptions. Also the huge reduction in the numbers of flights scheduled by
most all airlines is another bummer.

About the only good deal remaining for free miles, at least for me, is the
Southwest Airlines free ticket deal, and you don't need any particular credit
card to get this deal. Southwest Airlines, to my knowledge, is the only major
airline to consistently earn a profit year-to-year. There are a lot of reasons
why!

"Gauging the Worth of a Frequent-Flier Credit Card," by Ron Lieber, The
New York Times, August 16, 2008 ---
Click Here

One after the other in recent weeks, airlines have
altered their frequent-flier mile programs, adding fees, taking away bonuses
and raising the number of miles you need for some free tickets.

But lost in fliers’ frustration over the changes is
this: It may make more sense to change the credit card you use, not the
airline you fly.

Consumers are currently holding about 45 million
credit cards issued by United States banks that reward their users with
frequent-flier miles, according to The Nilson Report, a payments systems
newsletter. That number has held steady for three years.

This may be the year that number starts dropping.
After a certain point, it will no longer make sense for many people to pay
the annual fees that mileage cards usually charge and pay new fees to book
tickets or upgrades. Will they also want to spend tens or hundreds of
thousands of dollars on a card just so they can try to redeem miles for a
single free plane ticket?

I’ve come up with five questions to ask yourself if
you’ve still got a mileage credit card at the top of your wallet, and a
number of alternatives for different types of cards. But first, some
snippets from the program changes, just in case you’ve missed them:

US Airways has stopped giving bonus miles to
members of its Dividend Miles program who have elite status, and the airline
also added reward booking fees that range from $25 to $50.

American added a new online booking fee for rewards
tickets and is about to raise the number of miles required for many flights.
Moreover, its customers will soon have to pay new or increased co-payments
much of the time, along with their frequent-flier miles, for upgrades to the
front of the plane.

Delta added its own surcharges and also raised the
number of miles customers will need to redeem for many free flights. Perhaps
most interestingly, it introduced a three-tier price chart. For flights to
49 states (not including Hawaii) and Canada, for example, you could end up
trading 25,000, 40,000 or 60,000 miles for a round-trip flight.

That 25,000-mile price for a free ticket has become
somewhat sacred. The major airlines have increased the prices in miles for
many other tickets, but not this one. How many people will give up on
finding available seats at the 25,000 level, then hand over 40,000 or 60,000
miles? It’s hard to say, but Delta probably hopes that it is a lot.

The availability question gets to the heart of the
matter. How hard is it to get free seats? And is it getting harder? The
frustrating thing about this whole game is that we don’t really know the
answers.

We don’t know how often average fliers get their
first (or 10th) choice of flight or destination when trying to use their
miles or just give up and buy the ticket. The airlines don’t tell us how
many seats are available on any given flight or if more will become
available later. Joe Brancatelli, proprietor of the business travel site
joesentme.com, refers to frequent-flier programs as unregulated lotteries,
which gets it about right.

Are fewer seats available for reasonable amounts of
miles? Well, most major airlines are reducing the number of seats they fly,
often by double-digit percentages. Flights are extremely crowded. But the
airlines keep selling their miles to credit card companies and others that
want to give them away to their own customers.

That means more miles are chasing fewer seats, even
if the airlines aren’t reducing the number of seats on each flight that
customers can book with a reasonable amount of miles.

It’s tempting to throw up your hands in despair at
the lack of information. But there are several questions that can help you
determine whether you want to keep adding miles from credit card spending to
the miles you earn on the plane. Start with these:

DO YOU CARRY A BALANCE? If you don’t pay your bill
in full each month, you’re excused from this discussion. You’ll do better by
using cards with lower interest rates than frequent-flier mile cards, which
generally have pretty high rates.

ARE YOUR CHILDREN IN SCHOOL? If they are, you’ll be
fighting everyone else who wants to travel at the same time. The airlines,
knowing your desperation to get out of town, may make fewer free seats
available during school vacations, since the airline will probably sell all
the seats on those flights anyway.

DO YOU HAVE ELITE STATUS? Some airlines — like
American, Northwest, United and Continental — carve out additional inventory
of free seats at their lower mileage levels for some or all customers with
elite status. That inventory, plus the bonus miles that most airlines still
offer to elite members, make a mileage credit card more attractive.

ARE YOU A BIG SPENDER? If you’re wealthy, or can
run business expenses through your card, you can earn six figures in miles
from card spending alone each year. A huge mileage balance gives you the
ability to exchange those miles for premium-class overseas tickets, which
could cost $10,000 or more if you bought them with cash. Miles are worth a
lot more if you redeem them for this sort of travel.

President Brad Stroh of Bills.com feels that
consumers debts are growing without conscious decisions being made. "For
those who are over their heads in debt, taking action quickly is critical,
before it's too late to prevent any temporary hardships from becoming
permanent financial crises," he warns.

Stroh has six steps that he says, if followed, will minimize the damage of
mounting debts.

First and foremost, stop charging.
Consumers are falling back on credit cards and using them as "emergency
funds", often doing more harm by charging items that they don't need and
that are not necessary.

Always pay bills on time. Pay on time,
even if you can only afford a minimum payment. Penalty rates for late
payments can be crippling, as high as 31 percent, which in turn leads to
a higher balance and higher minimums and big late fees. Cards may even
raise the interest rate if you are late in payment to another creditor.

Pay more than the minimum. Promise
yourself that you will pay more than necessary when ever you can, even
if it is $10 and round the amount out to the next $10 or $100 increment.
By doing this, you decrease the debt faster.

Pay the highest interest debt first.
Pay more on the debt that is charging the highest rate and move down in
order of the rate, saving the lowest rate debt for last, such as a
student loan.

Negotiate your rates. If you pay on
time and have a bigger debt than you would normally have, you might be a
company's ideal client, so try to capitalize on a good payment history
by getting your rate lowered, especially if it is above the 14.67
national average. Call customer service and ask. Try more than once.

Get help. There are many sources that
can provide help with debt problems and advice on how to get out of
debt, especially in cases such as medical problems that have resulted in
short-term debt. Borrowing money from family or combining old debt onto
a no-interest, lower interest card are some ideas, as are borrowing
against life insurance or retirement funds.

Bills.Com,
is a free, online service for consumers who need help on complex and
personal financial issues. The California company's co-founders and CEOs,
Brad Stroh and Andrew Housser, were recently named finalists for Northern
California by Ernst & Young's 2006 Entrepreneur of the Year Award. They
handle more than 7,500 clients, nationwide.

A friend went to the local gym and placed his belongings in the locker.

After the workout and a shower, he came out, saw the locker open, and thought
to himself, "Funny, I thought I locked the locker. Hmm." He dressed and just
flipped the wallet to make sure all was in order.

Everything looked okay - all cards were in place.

A few weeks later his credit card bill came - a whooping bill of $14,000!

He called the credit card company and started yelling at them, saying that he
did not make the transactions.

Customer care personnel verified that there was no Mistake in the system and
asked if his card had been stolen.

"No," he said, but then took out his wallet, pulled out the credit card, and
yep - you guessed it - a switch had been made. An expired similar credit card
from the same bank was in the wallet.

The thief broke into his locker at the gym and switched cards. Verdict: The
credit card issuer said since he did not report the card missing earlier, he
would have to pay the amount owed to them.

How much did he have to pay for items he did not buy?

$9,000 !

Why were there no calls made to verify the amount swiped? Small amounts
rarely trigger a "warning bell" with some credit card companies.

It just so happens that all the small amounts added up to one big one!

********************
SCENE 2.

A man at a local restaurant paid for his meal with his credit card.

The bill for the meal came, he signed it, and the waitress folded the receipt
and passed the credit card along.

Usually, he would just take it and place it in his wallet or pocket. Funny
enough, though, he actually took a look at the card and, lo and behold, it was
the expired card of another person.

He called the waitress and she looked perplexed.

She took it back, apologized, and hurried back to the counter under the
watchful eye of the man.

All the waitress did while walking to the counter was wave the wrong expired
card to the counter cashier, and the counter cashier immediately looked down and
took out the real card.

No exchange of words --- nothing! She took it and came back to the man with
an apology.

Verdict:

Make sure the credit cards in your wallet are yours. Check the name on the
card every time you sign for something and/or the card is taken away for even a
short period of time.

Many people just take back the credit card without even looking at it,
"assuming" that it has to be theirs.

FOR YOUR OWN SAKE, DEVELOP THE HABIT OF CHECKING YOUR CREDIT CARD EACH TIME
IT IS RETURNED TO YOU AFTER A TRANSACTION!

********************
SCENE 3:

Yesterday I went into a pizza restaurant to pick up an order that I had
called in.

I paid by using my Visa Check Card which, of course, is linked directly to my
checking account.

The young man behind the counter took my card, swiped it, then laid it on the
counter as he waited for the approval, which is pretty standard procedure.

While he waited, he picked up his cell phone and started dialing.

I noticed the phone because it is the same model I have, but nothing seemed
out of the ordinary.

Then I heard a click that sounded like my phone sounds when I take a
picture..

He then gave me back my card but kept the phone in his hand as if he was
still pressing buttons.

Meanwhile, I'm thinking: I wonder what he is taking a picture of, oblivious
to what was really going on.

It then dawned on me: the only thing there was my credit card, so now I'm
paying close attention to what he is doing.

He set his phone on the counter, leaving it open. About five seconds later, I
heard the chime that tells you that the picture has been saved.

Now I'm standing there struggling with the fact that this boy just took a
picture of my credit card.

Yes, he played it off well, because had we not had the same kind of phone, I
probably would ne ver have known what happened.

Needless to say, I immediately canceled that card as I was walking out of the
pizza parlor.

All I am saying is, be aware of your surroundings at all times

Whenever you are using your credit card take caution and don't be careless.
Notice who is standing near you and what they are doing when you use your card..

Be aware of phones, because many have a camera phone these days.

When you are in a restaurant and the waiter/waitress brings your card and
receipt for you to sign, make sure you scratch the number off.

Some restaurants are using only the last four digits, but a lot of them are
still putting the whole thing on there.

I have already been a victim of credit card fraud and, believe me, it i s not
fun. The truth is that they can get you even when you are careful, but don't
make it easy for them.

Jensen Comment
The above scenarios are interesting but I have a little difficulty entirely
believing all of Scene 1.

What credit card did the thief trade for the victim's card? If the thief used
his own credit card I nominate him for the
Darwin Award. Most likely the thief used another stolen card which we then
have to assume is still active since it was never confiscated by a merchant when
hour Scene 1 victim used it. Suppose the "victim" in Scene 1 was really a thief
who just claimed his card had been switched. He could then charge thousands of
dollars on a card he knew was stolen and, if caught, could claim to the police
that he was an innocent victim. Innocent ha ha!

Also credit card companies are supposed to make good on fraudulent purchases
in excess of $50 even if the card is not reported stolen. Why did our victim
have to pay $9,000? With credit card insurance you don't lose the $50.

Cuomo's Latest Targets Include Universities' Deals With Credit-Card
ProvidersAgreements with credit-card providers, however, appear
to be only a portion of what Mr. Cuomo is now exploring. A deputy counsel to the
attorney general, Benjamin M. Lawsky, this week outlined wide-reaching plans to
broaden the office's investigations into conflicts of interest in the
arrangements between colleges and companies that do business with the
institutions or their students and alumni. The new investigative work will
involve banking, health-insurance, textbook, food-service, and credit-card
companies that have business relationships with hundreds of American colleges,
Mr. Lawsky told a gathering of educators and guidance counselors from school
districts on New York's Long Island on Wednesday, Newsday reported.
Paul Basken, Chronicle of Higher Education, February 29, 2008 ---
http://chronicle.com/daily/2008/02/1898n.htm?utm_source=aw&utm_medium=en

Thanks to new laws, you can find out your FICO credit score. But lenders
now have a secret credit score on you that is their secret alone.While most people are aware that their credit score
can have a large impact on their financial lives, there is another score that
the credit bureaus keep that most people are not aware of - your Bankruptcy Risk
Score Your credit score is made up mostly of your history of obtaining credit
and paying off debt. This score helps determine what type of interest rate you
receive on credit cards or loans that you apply for. Most people assume that it
is this score alone is used by the financial institutions considering whether or
not to give you a loan. The truth is that a bankruptcy risk score is now being
used more and more when lending institutions are looking at a person's credit
history. The bankruptcy risk score has been around for about 20 years, but has
been kept fairly hush - hush. It measures how likely a person is to file
bankruptcy and uses information that makes it more specific than a credit risk
score. The bankruptcy risk score is exclusively for lenders provided by the
credit reporting agencies. This bankruptcy score is supposedly a complex mix of
your credit score plus your spending habits. The credit agencies and those that
use this report (and have contributed to creating it) don't want to reveal the
model because they spend a lot of time and money developing it and if they
explain it, they are giving away part of it's value. Therefore little is said
about this report (and why you have never likely heard of it before). You may be
able to learn a bit more about it in the near future. Experian is considering
making its bankruptcy risk score available to consumers. This is after they
revealed a study last July which ranked the states that had consumers who were
most likely to file for bankruptcy within the next year.
"Bankruptcy Risk Score - The Hidden Credit Score ," Jeffrey Administrator,
February 21, 2006 ---
http://www.savingadvice.com/forums/showthread.php?t=15148

Pay to Get Your FICO ScoreYour FICO credit score is crucial to your credit to your good name. It
can be altered without your knowing it due to fraud and errors. Getting a
free credit report may not give you a FICO scores as well. The main advantage of thefrom
http://www.myfico.com/ is that it will give you your FICO score from each of
the three major credit reporting agencies. Consumer Reports (August, Page 18)
notes that credit scores nearly always differ between the three major credit
reporting agencies. You may miss something if you only get one agency’s score.

To monitor your
FICO score, Consumer Reports (August 2005, Page 17) recommends that you get the
$44.85 package from
http://www.myfico.com/

"Canceling a card does not help your credit score," by Marshall Loeb,
MarketWatch, November 15, 2006 ---
Click Here

According to Bankrate.com, canceling your credit
card probably won't help your credit score. In fact, it could really hurt
it. Here's why: If you cancel a card, your "credit-utilization ratio" is
altered. Say you have five open credit-card accounts that add up to a total
available credit line of $50,000. Your total outstanding balance on all five
cards combined is $10,000. Thus, your credit-utilization ratio is 20%. But
if you cancel two of those cards, bringing your total available credit line
down to $25,000, the ratio jumps up to 40%. And that can make your credit
score go down.

Bankrate.com also warns against canceling an old
card. You build up a payment history on old cards, so if you cancel one
you've had for a while, you're only trimming the length of your credit
history. This can be especially damaging if the old card was one on which
you made regular payments. T

he best bet, of course, is to simply pay off your
cards. Unless you're paying fees to keep an account open, it's good enough
to pay down the balance -- and cut that card up.

Egads! Is this what you call filling in where schools fail?The College Board will administer its revised
college-admissions test to thousands of high-school juniors for the first time
on Saturday, and the test has generated a bonanza of new study aids. "The
new SAT has led to a flurry of new products because all publishers are starting
new -- there's a new thing to compete over," says Justin Kestler, a founder
of SparkNotes LLC, a division of Borders
Group Inc. Adds Jon Zeitlin, manager of college-prep programs for
Kaplan Inc., a unit of Washington
Post Co.: "We've been on a product-creation jag for months."
Test-prep giant Princeton
Review Inc., which isn't affiliated with Princeton University, has developed
software that delivers test questions, including critical-reading passages, to
cellphone screens -- then grades the answers and sends the results home to Mom
and Dad. Its chief competitor Kaplan has software for a cellphone or a Palm
device: Order up easy, medium or hard questions in reading, writing or
math. Texas
Instruments Inc. is programming all of its latest graphing calculators with
SAT math and vocabulary drills. And SparkNotes has its test-prep eye on the
ubiquitous iPod. "We're trying to figure out how to do it in audio,"
says Mr. Kestler. "It's the next big killer application."
June Kronholz, "To Tackle New SAT, Perhaps You Need A New Study
Device: Test-Prep CDs, Puzzles, Cellphone Software Hit A June Market of
Nonreaders," The Wall Street Journal, March 8. 2005, Page A1
--- http://online.wsj.com/article/0,,SB111024562510773081,00.html?mod=todays_us_page_one

Jensen Comment
College admission tests serve many purposes, not the least of which is to guide
students into what to learn in school. One of the failings of our schools
and the college tests is the failure to test and motivate students toward
understanding personal finance. Why is this important? Personal finances are a major cause of suicide and divorce.
Sometimes I don't think teachers really are concerned about the tragedies of
life that affect nearly all people later in life from the very poor to the very
rich. Our graduates mess of their lives because they mess up their personal
finances and/or allow themselves to be screwed by credit card companies, finance
companies, brokers, financial advisors, and banks (yes and banks).

Think of the many people whose lives might be saved and whose marriages
might be more successful if they understood the basics of who to keep out of
digging themselves into financial holes and how to stop digging once they're in
those holes.

"Majoring in Credit-Card Debt: Aggressive on-campus marketing by
credit-card companies is coming under fire. What should be done to educate
students about the dangers of plastic?" by Jessica Silver-Greenberg, Business
Week, September 4, 2007 ---
Click Here

This story is the first in
a series examining the increasing use of credit cards by
college students.

Seth
Woodworth stood paralyzed by fear in his parents' driveway
in Moses Lake, Wash. It was two years ago, during his
sophomore year at Central Washington University, and on this
visit, he was bringing home far more than laundry. He was
carrying more than $3,000 in credit-card debt. "I was pretty
terrified of listening to my voice mail because of all the
messages about the money I owed," says Woodworth. He did get
some help from his parents but still had to drop out of
school to pay down his debts.

Over the
next month, as 17 million college students flood the
nation's campuses, they will be greeted by swarms of
credit-card marketers. Frisbees, T-shirts, and even iPods
will be used as enticements to sign up, and marketing on the
Web will reinforce the message. Many kids will go for it.
Some 75% of college students have credit cards now, up from
67% in 1998. Just a generation earlier, a credit card on
campus was a great rarity.

For many of
the students now, the cards they get will simply be an
easier way to pay for groceries or books, with no long-term
negative consequences. But for Seth Woodworth and a growing
number like him, easy access to credit will lead to spending
beyond their means and debts that will compromise their
futures. The freshman 15, a fleshy souvenir of beer and
late-night pizza, is now taking on a new meaning, with some
freshman racking up more than $15,000 in credit-card debt
before they can legally drink. "It's astonishing to me to
see college students coming out of school with staggering
amounts of debt and credit scores so abominable that they
couldn't rent a car," says Representative Louise Slaughter
(D-N.Y.).

Congressional Oversight Weighed

The role of
credit-card companies in helping to build these mountains of
debt is coming under great scrutiny. Critics say that as the
companies compete for this important growth market, they
offer credit lines far out of proportion to students'
financial means, reaching $10,000 or more for youngsters
without jobs. The cards often come with little or no
financial education, leaving some unsophisticated students
with no idea what their obligations will be. Then when
students build up balances on their cards, they find
themselves trapped in a maze of jargon and baffling fees,
with annual interest rates shooting up to more than 30%. "No
industry in America is more deserving of oversight by
Congress," says Travis Plunkett, legislative director for
Consumer Federation of America, a consumer advocacy group.

The
oversight may be coming soon. With Democrats in control of
Congress and the debt problems for college kids only growing
worse, the chances of a crackdown have increased
substantially. The Senate is expected to hold hearings on
the credit-card industry's practices this fall.
Representative Barney Frank (D-Mass.) has pledged to
introduce tough legislation. And Slaughter introduced a bill
in August to limit the amount of credit that could be
extended to students to 20% of their income or $500 if their
parents co-sign for the card.

The
major credit-card companies take great issue with the
criticisms. Bank of America (BAC),
Citibank (C),
JPMorgan Chase (JPM),
American Express (AXP),
and others say they are providing a valuable service to
students and they work hard to ensure that their credit
cards are used responsibly. Citibank and JPMorgan both offer
extensive financial literacy materials for college students.
Citibank, for instance, says it distributed more than 5
million credit-education pieces to students, parents, and
administrators last year for free. At JPMorgan Chase, bank
representative Paul Hartwick says: "Our overall approach
toward college students is to help them build good financial
habits and a credit history that prepares them for a
lifetime of successful credit use."

Continued in article

In addition to a free annual credit report, you can get a
report following ID theft

Consumers who have evidence of attempts to open
fraudulent accounts in their name should contact those creditors
immediately, and file a report with the local police department. If
possible, obtain a copy of the police report, or at least the police report
number. Evidence of fraudulent activity allows victims to request that a
90-day fraud alert be extended to seven years, though a credit bureau will
require proof of identity and a copy of the police report.

Placing a fraud alert entitles you to a free copy
of your credit report from each of the major bureaus, in addition to a free
report the law allows every consumer to request annually. If you get a
fraud-related credit report, Givens advises waiting a few months before
ordering the annual free one.

Alert the credit bureaus and credit issuers in
writing of any inaccurate information or fraudulent accounts listed in your
credit reports. You also have the right to have the credit bureaus strike
any inquiries against your credit history that were generated by fraud.

For many identity-theft victims, being denied a
loan or line of credit or receiving a call from a debt collection agency is
the first sign of trouble. By law, if you inform a collector that a debt is
the result of identity theft, that collector also must inform the creditor,
and creditors are prohibited from selling debt that results from identity
theft or placing it for collection. You also are entitled to a copy of all
information about fraudulent debt, including late notices and account
statements.

At least 23 states have passed "security freeze"
laws that allow consumers to indefinitely prevent anyone from issuing credit
in their name. California, Colorado, Connecticut, Florida, Illinois,
Kentucky, Louisiana, Maine, Minnesota, Nevada, New Hampshire, New Jersey,
New York, North Carolina, Oklahoma, Utah, Vermont and Wisconsin provide all
their residents with the option of placing a security freeze on their credit
files. Hawaii, Kansas, South Dakota, Texas and Washington currently provide
this option only to ID theft victims.

A number of state laws also are driving businesses
to alert consumers about potential data losses, but legislation being
considered on Capitol Hill could soon change that. Ed Mierzwinski, consumer
program director of the U.S. Public Interest Research Group, a consumer
watchdog group in Washington, said a bill recently passed by the House
Financial Services Committee and supported by the major financial
institutions would exempt companies from alerting consumers about data
thefts or losses if the company does not know whether that loss places the
consumer at a direct risk of identity theft. The bill also would reserve
credit freezes for ID theft victims only.

Update on the dirty secrets of our credit card systems: A hidden
"tax" on those that opt outPer-transaction "interchange" fees are a silent but
very effective tax. And as card issuers continue down the perilous path of not
charging their customers anything for the credit cards they use, the thirst for
"tax money" becomes ever greater.But the real rub is that retailers will
pass along the higher premium-card fees to all customers, including those who
don't qualify for a credit card, let alone a premium card. Checks and cash still
account for more than 50% of all retail payments, and the sad truth is that it
is precisely those who can pay only by check or cash who are footing most of the
bill for the costs of these cards. In most tax systems the wealthy pay most of
the taxes; in this model, those who can't or don't use credit cards are paying
for those who do qualify for them. Here's the real dirty secret of the
card-issuing industry: Because card regulations demand that cardholders pay no
more for goods and services than cash and check customers, the working poor are
subsidizing the vacation points earned by America's top income classes.
"A Dirty Little Secret About Credit Cards," The Wall Street Journal, May
4, 2005; Page A19 ---
http://online.wsj.com/article/0,,SB111517843155624225,00.html?mod=todays_us_opinion

You can watch the
entire Frontline video from the link on the above site.

Should
you get a Capital One credit card?

The point is that
credit card companies don't care how rich you are or even your liquidity.It's your payment practice on all your accounts payable that really
counts. Payment history is the main
ingredient of a FICO score, but the actual FICO formula is very complex --- http://www.consumeraffairs.com/finance/fico.html

You're a grade C
credit card user if you zero out all your accounts payable in less than 20 days.Good guys don't get an A or a F grade as credit card customers.Of course the credit card companies still get a percentage of your
purchase prices from the vendors who sold you the goods. Credit
card companies always get something (usually around 6% of the price), but
vendors can negotiate the rate they pay on their customers' purchases.
Credit card companies don't care as much for C grade customers because they are
limited to the what the product vendors pay one time on each purchase.

You're a Grade B
card user if you don't (or can't) pay off your entire monthly balances.A Grade B customer always pays the minimum balance due on each credit
card, but never in his lifetime pays off an entire balance due. That
way the credit card companies collect forever (actually only about 35 years if
you don't add to your account) from you in addition to what the product vendor
initially paid to them for your purchase.

You're a Grade A
customer for Visa if you miss one payment on your Discover card but keep on
making all minimum payments on your Visa. That
way Visa can jack up your interest rate from 8.9% to 29.9% APR for the rest of
your life because your FICO score increased due to one missed payment on any one
of your credit cards or other accounts.The
Frontline show has a segment on how one guy's perfect six-year perfect record of
making minimum payments did not prevent his interest rate from jumping up by 20%
when it was discovered by the FICO folks that he missed one payment on an
account six years in the past. This is funny (sad?) because this guy’s
credit card company’s CEO phoned the guy after the Frontline TV show aired and
lowered his rate back down to 8.9%.

It's the indexing
of your changing interest rates to your increased FICO score that's the biggest
"secret" credit card companies don't want consumers to understand.The Frontline show ("Secret History of the Credit Card")
stresses that most consumers don't even know what a FICO score is let alone how
it affects their future interest rates on all their credit card unpaid balances.
See http://www.pbs.org/wgbh/pages/frontline/shows/credit/eight/

How
can you beat this scam?
Never pay less than the minimum amount due, control your credit addiction, and
try to zero out every credit card balance in less than 20 days or whatever the
payment cycle is on your card. If this fails I would not necessarily
advise getting a Capital One card.

The
Minnesota state attorney general’s office has sued one of the nation's largest
credit card issuers (Capital One),
claiming it is misleading consumers with promises of “fixed“ interest rates,
then hiking their rates as much as 400 percent.Bob Sullivan, MSNBC, "Capital One Sued Over Marketing
Practices," January 3, 2005 ---http://www.msnbc.msn.com/id/6781155/

I have another, totally unrelated reason for not
getting a Capital One card. I must say, this story has given me great meat for
class discussion in auditing!

When I applied for a mortgage 8 years ago, my credit
report contained a three-year-old written-off Capital One card to the tune of
$8,000. I had never heard of this card, and it had been issued in my maiden
name!

Just think of all the failures of internal controls
my case included. At the time the card was issued, they used a marketing list
at least three years old to solicit the account. A basic credit check would
have revealed that I no longer went by that name, and that in fact I had taken
out a mortgage in the past year at a different address. They allowed the
perpetrator to run up over $6,000 of charges without having made a single
payment. They made no effort to contact me to collect the money, or they'd
have discovered the fraud two years earlier. Finally, after I submitted an
affadavit to disclaim the account and after they had my credit cleared, they
started calling me to collect the debt. Unbelievable!

What do you tell college students about getting store
credit cards in order to get the initial 15% discount on merchandise? My
daughter gets every credit card Express, Old Navy etc. will give her in order
to get the discount and then she cancels the card after the first bill. She
feels that she is getting the benefit of the marketing system and none of the
costs of having open credit lines count against her (or tempt her).

Barbara: She should be concerned about her FICO
score. The more inquiries made by department stores, the lower her FICO score
will be. The FICO scoring secret algorithms view frequent credit applications
a sign of desperation, even if the application is successful.

Q. What are some common missteps that bring down your
score?

A. Balance transfers on your credit cards, for one
thing. It may seem smart to load all your debt onto one low-rate card. But if
you max out on a high-limit card, your credit score takes a big hit. Even if
you aren't applying for more credit, your current credit-card companies may
raise your interest rates because your credit score dropped.

The whole instant-credit thing also hurts your
credit, like when you're at the Gap and they say you get 10 percent off if you
apply for a credit card and buy this thing using your new credit card.

You have the combined effect of an "inquiry for
new credit" and a small credit limit on the store card, which you already
filled up. Both are bad.

The other thing you have to watch out for are
collections, the leading type of which is medical collection. Many of those
are mistakes -- often an insurance company is responsible for a co-payment,
but the doctor bills it to the patient and it ends up becoming a collection.

Richard J. Campbell
School of Business
University of Rio Grande
Rio Grande, OH 45674

If she lives in Texas she should request her free
credit report from all three agencies starting in June. This can be done at http://www.annualcreditreport.com
If she doesn't live in Texas, that site will also tell her when they will be
available for her location. She will notice that all of those credit cards are
on her report, whether they have a balance or not, whether they are closed or
not.

She should then get her FICO score. She will have to
pay a small amount for this but it will tell her the score AND what she can do
to make it higher. The higher it is the better interest rates you receive on
loans from cars to mortgages. If she has been doing what you say, it will most
likely report that there have been too many inquiries (like Richard said) and
they are lowering her score. It may still be over 700, which seems to be the
demarcation line for quick loan acceptance with decent rates but the next
inquiry (which she might need for something really important) might drop it
below 700 and that would cost her big money (much more than she saved on those
department store discounts), especially if it means the difference of a
half-point or more on a 30 year mortgage.

College students tend to be very short sighted so
this will probably be a big sale on your part -- as you well know. I have two
daughters myself which are both out of college now, but still, the only time
they listen to ole dad is when they already agree with him and tells them what
they want to hear:-)

John C. Roberts, Jr.
Saint Johns River Community College
283 College Drive Orange Park, FL 32065

February 6, 2005 reply from Bob Jensen

I was careless in mentioning that you can get a free credit report and FICO
score. Not everyone can get these as of yet. There is a stupid, perhaps
technically necessary, lagged in part of this that began in the West and will
roll across the country in phases. It is very important to read the rules of
the road at http://www.ftc.gov/bcp/conline/edcams/credit/ycr_free_reports.htm

Some outfits are advertising free credit reports now, but read the fine
print and consumer beware:

University of West
Florida students might have more trouble resisting the urge to splurge this
year.

UWF is one of several state universities releasing
student contact information to banks and credit card companies, which
subsequently bombard mailboxes and in-boxes with credit card and other
solicitations.

The University of Florida, the University of
Central Florida and the University of South Florida also are releasing
student information.

UWF says it has no choice but to release the
information -- unless a student specifically requests that it be kept
private.

Because of the state's public records law, anyone
who submits a request can obtain directory information -- student names,
phone numbers, addresses, e-mails and majors, said Ann Dzaidon, university
registrar.

"We are a public institution," she said. "We have
to follow certain requirements."

Students who want to keep their information private
can fill out a form in the registrar's office or access their records
online, she said.

"Students do have the right to protect their own
records," Dzaidon said.

Banks and companies also look to alumni and
athletic organizations for records. But Missy Grace, UWF's alumni
coordinator, said they won't get it from her.

"We don't give out anything," she said. "The
directory is online, but you have to have a password. Everything's
confidential."

Some out-of-state colleges charge a fee for the
information, using the profit to offset declining government revenue.

The easy access to student information comes as
some groups have warned that college-age consumers are accumulating alarming
debt. According to Nellie Mae, a leading provider of higher education loans,
a study of last year's student loan applicants showed that college students
hold an average of three separate credit cards. About 78 percent of students
have at least one card, and at least 32 percent of students have four or
more cards.

On June 8, 1999, the Consumer
Federation of America (CFA) convened a major press conference on student
credit card debt at the National Press Club in Washington, D.C. The program
featured leading consumer advocates, mothers of two college students whose
credit card debts contributed to their recent suicides, and the release of
the first major academic study of student credit card debt that was based on
both in-depth interviews and cross-sectional, survey data. The highly
publicized event was widely reported in the national and regional media.
This is because the previously neglected social consequences of credit card
debt captured the nation’s attention in front-page newspaper stories,
magazine articles, newspaper editorials, evening television news programs,
cable TV interviews, and radio call-in shows.

Although
Americans have become inured to the tremendous growth of the national debt
and economic consequences of corporate mergers, the newly reported social
impacts of student debt struck a chord in the national consciousness. Most
Americans assumed that college administrators are responsible for providing
a safe, nurturing environment where parents can expect that their children
will acquire the personal skills and professional experiences necessary for
a rewarding future. Instead, it was a national revelation that young lives
were being ruined by credit card debt due to dropping out of college
(misclassified as academic casualties), health problems (physical and
emotional), family conflicts, bankruptcy, job rejections (due to poor credit
histories), loan denials, inability to rent apartments, professional school
rejection, and even suicide. Many people were aware of anecdotal stories of
family members or friends whose collegiate careers were disrupted or
abruptly ended by credit card debts. However, most had been persuaded by the
assurances of the credit card industry that the problem affected only a
small number of students (3-4 percent) and most of them would suffer only a
minor financial inconvenience after beginning their work careers.

The personal
testimonies of parents whose children committed suicide challenged the
benign image of student credit card debt as a new adolescent rite of passage
of the “Just Do It”-”Shop ‘til You Drop” generation. Their anguish resonated
with the concerns of all Americans who realized that their own sons and
daughters were at risk to the predatory marketing policies of the credit
card industry. Janne O’Donnell described the despair of her 22 year-old son,
a National Merit finalist and a “letters” major, who succumbed to the
temptations of “easy money:”

“A week
before Sean killed himself [we] had a long talk about his debts and
about his future. He told me he had no idea how to get out of his
financial mess and didn’t see much of a future for himself. He had
wanted to got to law school but didn’t think he could get a loan to pay
tuition because he owed so much on his cards... Sean tried to pay off
his debts. He went through credit counseling but fell further behind...
and moved [from University of Dallas] back home with us to attend the
University of Oklahoma. He was working 2 jobs while attending OU. Still
he couldn’t make ends meet... By the time he died he had 12 [credit]
cards including 1 MasterCard, 2 Visas, Neiman-Marcus, Saks 5th Avenue,
Macy’s Marshall Fields, Conoco, and Discover. How those companies can
justify giving credit to a person making $5.15 an hour is beyond me...
Credit must be based on the applicant’s present income--not on potential
to earn... There simply has to be some limits set on credit card
companies before more students end up in bankruptcy or dead.”

O’Donnell later
described the emotional pain of making the “hard” decision not to help Sean
with his mounting credit card bills. In previous years, Janne and her
husband had paid some of his debts. In retrospect, however, they believed
that their assistance had actually been a “disservice” by not “holding him
responsible for his debts.” At the time, Sean expressed his desire to attend
graduate school and become a lawyer. With his younger brother preparing to
start college in the fall, Janne explained that “we thought our money should
be spent paying for Tim’s bachelor’s degree rather than graduate school for
Sean. It was a [difficult] choice of allocating our [limited] resources.” As
Janne pondered this agonizing dilemma, she related that “I don’t know if it
was the right decision and I do not know if Sean would be here today if we
had paid his bills. It haunts us still.”

Sadly,
Janne and her family are regularly reminded of their personal tragedy due to
ongoing debt collection activities. The aggressive tactics of one particular
bill collector continues to haunt O’Donnell, “He called about Sean’s credit
card debt [a year later]. I left two messages explaining his death and where
to get a copy of his death certificate. I just couldn’t believe it when I
received the third phone call... [This time] he insisted that I pay [Sean’s]
debt. I’ll never forget [this conversation]... he said to me ‘wouldn’t you
want to honor his memory by paying off his debts.’ I was so angry. If I had
the money, I would have paid them [earlier] and Sean might be with us
today.” As if the O’Donnells need further reminders of their ordeal, Chase
and other credit card companies still mail “pre-approved” credit card
applications in Sean’s name to their home. And, more instructively, “the
creditors still call but not as often.”See O’Donnel Web site

To the chagrin
of the credit card industry, the national debate continues to intensify over
the seriousness of the student debt problem and who is ultimately
responsible. Criticism of the industry’s methodologically flawed research
(which have been previously used to soften and systematically underestimates
student credit card debt) elicited a flurry of journalistic and academic
investigations that confirmed many key findings of Manning’s 1999 CFA study.
Significantly, the most striking feature of the ongoing furor over predatory
marketing to college and high school students has been the adamant refusal
of the credit card industry to publicly acknowledge any culpability. In
fact, representatives of the credit card industry have rejected all requests
to participate in national television or radio programs that specifically
addressed the issue of student credit card debt. As CNN reporter Brooks
Jackson concluded the “Headline News” story on the CFA press conference, he
explained that “credit card companies say [that] most students use credit
responsibly but the representatives [of] Visa, MasterCard, American Express
would not go on camera to discuss this story.” The following week, Visa even
withdrew its spokesperson from an interview on “Good Morning America” which
included O’Donnell and Manning. To the surprise of millions of viewers, a
miffed Diane Sawyer curtly commented that “the credit card companies, by the
way, would not come on our program to talk with us [about the CFA study].”

For the credit
card companies, their initial public relations strategy was to dismiss the
scholarly criticism and its relevance to the public as unrepresentative of
national trends and the student suicides as anecdotal anomalies. By ignoring
the negative publicity, they gambled on the expectation that the public’s
attention would shift during the summer to baseball pennant races and family
vacations, financed by friendly credit cards--of course. Instead, the
groundswell of opposition to credit card marketing and lending policies led
to mounting public pressures for political action in the form of federal
bills and legislative amendments as well as the introduction of restrictive
marketing bills in at least nine state legislatures. The most prominent
federal response is HR-3142, the “College Student Credit Card Protection
Act,” which was introduced by U.S. Congresswoman Louise Slaughter (D-NY) in
October 1999 and again in January 2001.

Additionally,
student groups, parents and alumni have intensified pressure on college
administrators to ban or restrict credit card marketing on their campuses.
During the academic year 1999-2000, over 400 colleges and universities
formulated official policies against on-campus credit card marketing and
nearly 600 other schools are considering similar restrictions.
Significantly, the most effective policies have been instituted by small,
liberal arts colleges where the loss of even a few students has social and
economic repercussions. Conversely, it is large public schools with their
highly profitable student populations where credit card companies are
aggressively directing their energies. This includes the threat of potential
lawsuits against non-cooperative universities, persuasive tactics of
corporate lobbyists, major donations, and of course lucrative marketing
contracts such as the $16 million deal with the University of Tennessee. The
latter has provoked greater public scrutiny of “exclusive licensing”
agreements with colleges that generate millions of dollars in annual fees.

In addition to
the public scrutiny of college administrators in providing a “safe”
environment for their students, the result has been greater attention to the
role of colleges and universities in promoting complacent attitudes toward
personal debt and the need for effective credit card education/financial
literacy programs. The latter focus is reminiscent of the beer industry’s
“Drink Responsibly” campaign which publicly lauds cautious attitudes toward
alcohol consumption but loathes the impact on its financial bottom line.
Unfortunately, the current business climate of higher education rewards
revenue enhancement programs over instructional excellence. This explains
why many college administrators are willing to sacrifice the long-term
interests of their students and their own institutional interests for the
short-term financial inducements of the credit card industry.

"'Pretexting' is common in business world," by Peter Svensson,
Yahoo News, September 13, 2006 ---
Click Here

Although the boardroom scandal at Hewlett-Packard
Co. made the practice more widely known, buying phone records or other
personal information obtained by "pretext" calls appears to have been common
in parts of the business world. ADVERTISEMENT

In a letter to the House Energy and Commerce
committee, which was investigating the issue this year, data broker PDJ
Investigative Services described its customers as "law offices, repossession
companies, financial institutions, collection agencies, bail enforcement
agencies, law enforcement agencies and various private investigation and
research companies."

"Those businesses have a common need. That need is
to be able to locate individuals, who do not wish to be found," another data
broker, Universal Communications Co., wrote to the committee.

For example, banks sought to find debtors who
defaulted on loan payments, and car finance companies traced people who
stopped paying their auto loans and disappeared, Universal Communications
said.

PDJ sold records of local and long-distance calls
as well as non-published phone numbers and home addresses, according to an
old price list submitted to the House committee.

In its letter, PDJ said it did not perform pretext
calls itself, but paid independent vendors for the information, or searched
public databases and the Internet.

Robert Douglas, a privacy consultant in Colorado
who closely follows pretexting and other investigatory techniques, said such
independent vendors use sophisticated methods to fool customer service
representatives into giving out information.

However, the attention given to pretexting in the
past two years — the HP scandal is just the latest in a series of
revelations — has made data brokers restrict sales of certain kinds of
information. Cell phone companies, one of the major targets of pretexters,
also have fought back by launching lawsuits.

James Cain, a terminally ill Florida veteran, got
his first Social Security disability payment last month. Before he could
withdraw any of it to pay for his medicine or mortgage, his bank took it out
of his account.

His wife's Social Security check went in the same
day. The bank took most of that, too. It withdrew the money to make payments
to itself on a car loan the bank had made to the Cains.

Federal law says Social Security can't be taken to
repay debts. So how can banks do it?

They don't use the technique of debt collectors,
which is to file garnishment orders on bank accounts -- orders that succeed
because by and large no one is enforcing the exemption (see adjoining
article).

Banks have a different rationale. They say the
federal ban on taking Social Security benefits to repay debts doesn't apply
to them. The reason: They aren't really collecting debts.

Auto Loan at the Bank

They cite the doctrine of "set-off," which says
banks can collect money that customers owe them by taking it out of
customers' accounts. All agree this traditional practice makes sense for
routine fees like monthly account charges. But banks apply it broadly, to
other money customers owe them. Banks argue that when they take cash out of
a customer's account -- including cash from a Social Security check -- they
aren't really collecting a debt, just "setting off" what's owed them.

The Cains, of Palm Coast, Fla., took out a $31,000
loan from a SunTrust bank to buy a Ford Expedition in 2005. But last summer,
Mr. Cain was diagnosed with bladder cancer and soon was unable to work. His
wife, Elna, tried to find someone to take over the $690 monthly payments but
couldn't, so she surrendered the SUV to the bank this January. After selling
it at auction for $16,000, the bank told the Cains they owed it a balance of
$15,703, which included late charges, repossession expenses and interest.

Mrs. Cain, 63, says she told the bank her husband's
cancer had spread and he was confined to a wheelchair. They lost their
health coverage when he had to quit working. A Vietnam vet, Mr. Cain has
applied for veteran's benefits, but isn't yet receiving them.

He also applied for Social Security disability. On
March 14, both his first disability check, $1,343, and Mrs. Cain's $1,161
regular Social Security hit their SunTrust account through direct deposit.

The same day, SunTrust took $1,924 out of their
account. The next week, the Cains got a letter from SunTrust Recovery
Department, dated March 15, thanking them for their payment.

Exempt Funds

Besides Social Security, the Cains' account
received money from Mrs. Cain's pension from the American Red Cross. In
Florida, that is also exempt from collection to repay a debt.

The Cains contend they had never given SunTrust
permission to debit their account. SunTrust Banks Inc. pointed to its
deposit agreements, which say that the bank can use money in customers'
accounts to offset debts to the bank.

Asked whether the bank believes its set-off right
makes it legal to seize exempt funds such as Social Security, the bank said
in a statement: "We cannot publicly disclose the specifics of individual
client relationships. However, in cases when we offset accounts for
delinquent loans, we as a matter of policy exclude exempt funds and provide
proper notice to the customer."

Mark Budnitz, a Georgia State College of Law
professor and co-author of "Consumer Banking and Payment Law," said, "It's
an abuse of the right of set-off to use it to take money from Social
Security funds.... Banks are flouting federal policy."

California Lawsuit

A case before the California Supreme Court is
testing the issue. The court has agreed to review a suit alleging that Bank
of America Corp. seeks to profit from Social Security recipients by charging
high fees and taking them from the recipients' accounts.

The suit cites a case where the bank charged a
Santa Cruz man five overdraft fees in one day, totaling $160, based on
debit-card purchases that totaled $11. It took this out of an account funded
by Social Security disability benefit checks for the man, the victim of a
disabling head injury.

The fees are steep because of a newer type of
overdraft protection common with direct-deposit accounts set up to receive
Social Security. Instead of a line of credit, which preferred customers get,
this newer type creates a short-term loan to the account holder every time
he or she writes a check or makes an ATM withdrawal from an account with
insufficient funds.

Each such loan carries a fee, typically $25 to $30,
instead of interest. And instead of giving the customer time to repay, the
bank repays itself out of the account as soon as the customer puts some more
money in it.

Many of the largest U.S. credit-card companies
require customers to sign away their ability to take disputes to court and
instead settle disagreements in arbitration.

Now that practice itself is under attack in court.
A lawsuit filed recently in federal court in New York City alleges the
credit-card companies held secret meetings where they colluded to promote
arbitration, in violation of federal antitrust laws.

Some of the banks named allegedly convened a group
in 1999 called the "Arbitration Coalition" or "Arbitration Group," the
complaint says.

The suit, which was filed last month and is seeking
class-action status, claims that bank representatives spoke or met at least
20 times from 1999 to 2003 to share experiences from arbitration as well as
advice on how to set up arbitration agreements with consumers that would
withstand challenges in court.

Continued in article

An
entirely new definition of bankruptcy: What you don't know about a pending
bill might hurt you"Most of the credit cards that end up in
bankruptcy proceedings have already made a profit for the companies that issued
them," said Robert R. Weed, a Virginia bankruptcy lawyer and onetime aide
to former Republican House Speaker Newt Gingrich. "That's because
people are paying so many fees that they've already paid more than was
originally borrowed," he said. In addition, some experts say, the
changes proposed in the Senate bill would fundamentally alter long-standing
American legal policy on debt. Under bankruptcy laws as they have existed for
more than a century, creditors can seize almost all of a bankrupt debtor's
assets, but they cannot lay claim to future earnings. The proposed law, by
preventing many debtors from seeking bankruptcy protection, would compel
financially insolvent borrowers to continue trying to pay off the old debts
almost indefinitely . . . Debate about the bill continued Thursday, with the
Republican-controlled Senate refusing to limit consumer interest rates to 30%.
The vote was a bipartisan 74 to 24 to kill a proposed amendment by Sen. Mark
Dayton (news,
bio,
voting
record) (D-Minn.). Senate passage of the bill is expected next week.
Peter G. Gosselin, "Credit Card Firms Won as Users Lost," The Los
Angeles Times, March 4, 2005 --- http://snipurl.com/LAtimesMarch4
Bob Jensen's threads on credit card company dirty secrets are at http://www.trinity.edu/rjensen/FraudReporting.htm#FICO

Questions
Is your university getting credit card kickbacks on student and alumni use of
credit cards?
Did you know that many universities send names, addresses, and social security
numbers of students and alumni to a company that solicits them to use a credit
card?

Answers
January 19, 2005 message (re-written by Bob Jensen) from a former high level
university administrator

Many, if not most, colleges and universities are doing this. The reason: every
time a credit card is used for any purchase, the university gets a percentage (for
each purchase transaction) from the credit card company "as a gift." This
kind of income is generally not recognized as a gift by the rules of the
college and university auditors/business managers (see NACUBO).
Why should the university provide any of this information? In addition to not
informing people that this information is being "sold," this
practice encourages college students and alumni to go into more debt.

That was a question one reader posed to me recently.
He thought I was wrong to advise a young woman not to transfer $13,000 of
student loan debt to a credit card offering a very low interest rate.

But I'm not nuts, just realistic. I recommended that
the woman with the student loan debt not do it because those low-interest-rate
cards come with too many loopholes that allow a credit card company to hike
the rate even if you sneeze wrong.

''You give folks far too little 'credit' for being
able to monitor their situation," the reader scolded me.

It's not that I don't think people can't handle
credit well; it's that folks sign up for these cards without reading or
understanding the fine print, which states that minor missteps in the handling
of their accounts can trigger increased rates -- significantly higher interest
rates (much higher than the 8.25 percent fixed rate the woman in question was
paying on her student loan).

Actually, to the dismay of some, you can do
everything right and still have your credit card rate increased.

In fact, Minnesota Attorney General Mike Hatch is
going after one giant credit card company for what he says is a deliberate
attempt to mislead people into signing up for what they think are permanently
fixed-rate credit cards.

In a lawsuit filed recently against two subsidiaries
of Capital
One Financial Corp., Hatch alleges that the company uses false, deceptive,
and misleading television advertisements, direct-mail solicitations, and
customer service telephone scripts to market credit cards with allegedly
''low" and ''fixed" interest rates that, unlike its competitors,
will never be increased.

Capital One said in a statement that it has done
nothing wrong.

I do believe that much of the advertising for credit
cards doesn't emphasize that special low rates can be taken away for any
number of bill-paying infractions -- making a single payment late (even by one
day) or exceeding your credit limit.

However, what many consumers don't understand is that
the word ''fixed" in the credit card world isn't the same as, for
example, a 30-year ''fixed" mortgage loan. You can pay your mortgage late
or not at all and your rate will be the same. You might get kicked out of your
house or ruin your credit rating, but you won't get kicked up to a higher
interest rate.

Not so with credit cards. A fixed credit card rate
can be changed.

Hatch's suit alleges that consumers are not
adequately informed of what can happen with a low-interest-rate card and cites
case histories from several Minnesota cardholders. Here are some examples
outlined in the lawsuit:

Nicole Bourgeois opened a credit card account with
Capital One in July 2003. Bourgeois had seen a Capital One television ad
offering low, fixed-rate credit cards. Based on the ads, she thought fixed
meant the rate would not change for the life of the card. Bourgeois and her
husband had wanted to consolidate debt from other credit cards into a single
joint account with a low interest rate. Bourgeois received a card with a rate
of 4.9 percent. But nearly a year after having the card, she noticed one month
her rate had been increased to more than 14 percent. She called Capital One
and was told that the increase was the result of one late payment.

Robert Stein said he found the prospect of a low
fixed-rate card very appealing. He believed that the term ''low fixed
rate" meant that the interest rate would stay at 4.9 percent for as long
as he had the card. However, Stein's rate increased to 6.9 percent. Why? When
he called to inquire, he was told his interest rate was increased because his
payment was received two days past the due date.

Betty Ramsland obtained a Capital One credit card in
2002 with a fixed rate of 8.9 percent. Two years later, Ramsland's rate was
raised to 14.95 percent. Ramsland said in the lawsuit she asked the company
why her rate was increased but didn't receive an explanation.

Sure, some people move around debt from one
low-interest credit card to another with no problem. But you're nuts to
believe a promise of a forever fixed-rate credit card. Maybe it will stay
fixed. Maybe it won't.

Part of a message received from a friend on March 1, 2005

Dear XXXXX

Thank you for your
email, and for your consideration of our request to support PAA. The alumni
association does receive a percentage of the total amount of charges submitted
by our alumni who use the card. We are precluded by contractual arrangements
from disclosing the percentages or amount but I can tell you that this is a
significant revenue source for the alumni association.

The revenue from this
program is used in a variety of ways to support the programs and services
offered to our alumni and members. These funds help support our outreach
efforts such as alumni clubs, student recruitment events, Purdue on the Road
events. In addition these funds help support the Faculty Incentive Grant
program to assist in faculty development, Diversity Grants to support diverse
programming efforts and Legacy events that highlight Purdue students whose
parents are graduates of Purdue as well.

In addition to the
financial support is another way to market Purdue throughout the world. Every
time someone pulls the card out of their wallet they are marketing Purdue for
us.

I am more than happy
to answer any further questions you might have and thank you for your email.
It is very important for our alumni to be informed about our programs and I
appreciate your thoughtful questions.

Best wishes,

YYYYY

Jensen CommentOne of my friends forwarded the above
message. It reflects what is commonplace now among alumni associations of
colleges. These associations promote a particular credit card company and
receive revenue for this service on purchases of alumni and students. I
suspect it is not unethical as long as alumni and students are aware of all
facts in the situation. The letter above does not mention that alumni
associations generally forward more than names and addresses to credit card
companies and possibly other vendors. I have some concerns when they
forward social security numbers without express written consent for
alumni. I also have concerns when alumni are not aware of how or who is
receiving confidential information from alumni associations.

I have
written previously about this general practice at http://www.trinity.edu/rjensen/FraudReporting.htm#FICO
I think the credit card companies want the social security numbers of all alumni
and students so that FICO ratings can be investigated before inviting an alumnus
or student to apply for a University of ZZZZZ credit card.

Probably the most technical and complete muck raking about credit rating
agency conflicts of interest arose in a law paper by Frank Partnoy (my hero)
with particular reference to evidence uncovered in the Enron
investigation. It is particularly revealing how the credit rating agencies
helped to artificially inflate Enron's credit rating. Time Magazine
reported on this on January 14, 2002. But the most complete analysis of
how rotten these agencies are to the core is in the following reference from my
hero:

A recent academic study compared ratings by Moody's
with those of Egan-Jones. William H. Beaver, professor of accounting at
Stanford's graduate school of business, Catherine Shakespeare, assistant
professor at the University of Michigan Business School and Mark T. Soliman,
also at Stanford, analyzed ratings on some 800 companies made by both services
from 1997 to 2002. The academics found that Egan-Jones's ratings changes
were more timely than those of Moody's, coming up to six months sooner. The
study also found much higher stock returns after rating changes by Egan-Jones
than by those of Moody's. "Using several tests we find that the
noncertified firm, EJR is more responsive and closely associated with
investors," the study noted."Wanted: Credit Ratings. Objective Ones, Please," by
Gretchen Morgenson, The New York Times, February 6, 2005 --- http://www.nytimes.com/2005/02/06/business/yourmoney/06gret.html?oref=login

For years, the nation's credit rating agencies have
thrived, booking mouth-watering profits from operations that are riddled with
conflicts and shielded from competition.

Soon, however, that may finally change. And investors
should be better off for it.

Within the next two months, the Securities and
Exchange Commission will press a new regulatory framework for the industry to
ensure that debt ratings published by the big three - Standard & Poor's,
Moody's Investors Service and Fitch Ratings - are a result of thorough
analysis, not a desire for fatter profits.

"I think it's fair to say that the oversight of
the industry is insufficient," said Annette L. Nazareth, director of
market regulation at the Securities and Exchange Commission. "We want the
firms to commit to meet certain standards with respect to policies and
procedures on conflicts of interest and solicitation of ratings. Right now we
don't have that at all."

Now that would be an upgrade, long overdue. Indeed,
given how regulators have attacked conflicts of interest among Wall Street
firms, insurance companies and other financial services concerns, it's
astounding that the ratings agencies have been allowed to go on this way for
so long.

Rating agencies play an enormous role in a huge
market. After all, far more debt is issued than stock; last year, corporations
issued $1.2 trillion in straight debt versus $146 billion raised in common
stock, according to Thomson First Call. An additional $1.4 trillion was issued
last year in mortgage debt and asset-backed securities.

All that paper needed a rating before it could be
sold to the public. As such, the financial markets rely heavily on the
companies that rate them.

Since 1931, for example, the Federal Reserve Board,
the Comptroller of the Currency and federal and state laws have regulated the
debt held by banks and other financial institutions, using credit ratings
assigned to the debt. Pension funds, banks and money market funds are barred
from buying debt issues that carry ratings below a certain level.

But not just any rating agency's rating, mind you. In
1975, the S.E.C. ruled that the laws relating to debt carried by banks and
financial institutions refer only to ratings provided by agencies that it
recognizes. Right now, these are the big three and a much smaller fourth,
Dominion Bond Rating Service of Canada.

What you have, in other words, is an oligopoly.

Even more troubling, this oligopoly earns its keep
from fees charged to the companies whose debt it rates. This conflicted
business model means that the paying customers for these agencies are the
corporations they analyze, not the investors who look to the ratings for help
in assessing a company's creditworthiness.

Other industry practices also lend themselves to
producing less-than-rigorous analysis. For example, rating agencies typically
receive the largest fees when they analyze an initial bond issue. After that a
nominal fee is levied, providing something of a disincentive to do in-depth,
time-consuming work.

And because the nation's courts have ruled that the
work of these agencies is opinion and therefore protected by the First
Amendment, the big three are protected from lawsuits from investors contending
defective analysis. Such lawsuits could act as policing mechanisms.

To make matters worse, these companies have recently
begun to expand the services they offer to corporations, leading regulators to
fear that ratings could be swayed by revenues earned on other products.

These problems are on the agenda for Tuesday, when
Senator Richard C. Shelby, the Alabama Republican who is chairman of the
Banking, Housing and Urban Affairs Committee, will hold hearings on the state
of the rating agencies. Executives from the big three are scheduled to
testify.

This is not the first time that Standard &
Poor's, Moody's and Fitch have been in the hot seat. When Enron and WorldCom
failed, investors were stunned by how long it had taken the agencies to
recognize the companies' declining fortunes. For example, all three agencies
had rated Enron an investment-grade company until four days before it filed
for bankruptcy. They had rated WorldCom similarly until a few months before it
collapsed.

The rating agencies stress that they analyze debt
issuers' financial positions to try to predict for investors an entity's
ability to pay off its debt. They are not in place to audit auditors, they
say, and cannot root out fraud. Their mandate is to provide transparency to
the financial market.

IN an interview on Friday, Raymond W. McDaniel, Jr.,
president of the Moody's Corporation, acknowledged the industry's conflicts
but said his company manages them effectively. "We do not link analyst
compensation, including bonus compensation, to the ratings they have on the
companies they follow or to the amount of fees they receive from those
companies," he said. "Beyond that, we have a collection of business
conduct policies and codes of practice and behavior which the entire Moody's
population is required to adhere to." Top executives at Standard &
Poor's, a division of the McGraw-Hill Companies, and Fitch, a unit of Fimalac,
were not available for comment, but both companies said they were aware of the
potential for conflicts and careful to prevent them.

Increased competition would certainly help investors
who are troubled by the conflicts. Unfortunately, companies hoping to break
into the ratings game must first earn the all-important designation from the
S.E.C. Such nods do not come often.

One upstart concern that has applied unsuccessfully
to the S.E.C. is Egan-Jones Ratings, of Philadelphia. It rates approximately
800 companies and had warned of problems at WorldCom, Enron and Global
Crossing well before other agencies. Egan-Jones does not accept payment from
companies it rates; investors who use its services pay the freight.

A recent academic study compared ratings by Moody's
with those of Egan-Jones. William H. Beaver, professor of accounting at
Stanford's graduate school of business, Catherine Shakespeare, assistant
professor at the University of Michigan Business School and Mark T. Soliman,
also at Stanford, analyzed ratings on some 800 companies made by both services
from 1997 to 2002.

The academics found that Egan-Jones's ratings changes
were more timely than those of Moody's, coming up to six months sooner. The
study also found much higher stock returns after rating changes by Egan-Jones
than by those of Moody's.

"Using several tests we find that the
noncertified firm, EJR is more responsive and closely associated with
investors," the study noted.

There is no evidence, of course, that Moody's
tardiness is a result of a conflicted business model. And Mr. McDaniel
maintains that ratings stability and accuracy are what customers want.
"The market has become extremely intolerant of false positives or false
negatives, and encouraged the ratings to only be moved when there is not a
likelihood that they would be reversed," he said.

I assume you mean if your credit score FALLS that
Capital One will increase your rate.

Incidentally, MBNA more than doubled my interest
rate, even though my score was rising and I never missed a payment.

You say your credit report and score are free. A free
credit report is currently only available for those in the west. Those of us
in the east have to wait until fall. I do not know of any source of free
credit scores. Do you?

The Fall 2006 Checking Account Pricing Study, a
survey conducted by Bankrate.com, found that some customer fees and
requirements hit record highs.

"What makes these fees especially irritating is
that they're avoidable," according to Greg McBride, senior financial analyst
for Bankrate.com. "It's something that pops up and bites you when you're not
careful."

Average Automated Teller Machine (ATM) fees charged
users of machines at banks where users do not have an account, were a record
$1.64, up a dime in a year. Although six banks reduced fees, 22 banks
increased the amount, bringing the number of banks with ATMs that charge
users to a record 98.3 percent. A lower percentage of banks-77 percent- are
assessing fees on their customers who use other bank's ATMs and maintain a
minimum balance on an interest account. Using numbers from the General
Accounting Office (GAO), Bankrate.com estimated that customers would pay a
total of $4.2 billion for non-bank ATM withdrawals in 2006, a slight drop
from 2005

There is no better news concerning minimum opening
deposits, which rose to record highs on both types of accounts, with
interest accounts getting hit the hardest, at a 43 percent increase, up to
an average $615.41. Non-interest account opening balances, although only
$87.67, still posted a 21 percent increase, with an average $209.72 required
minimum balance. This is the second lowest number ever found by the survey.
Monthly fees for these accounts are also at a record low.

The balance requirement to earn interest and avoid
fees is a whopping $2,660. The recent string of rate hikes is not reflected
in the dismal 0.34 percent yield. Bankrate.com states "there is no need to
maintain a large balance in a low yielding account when so many checking
accounts come without balance requirements or fees."

Fees on bounced checks, non-sufficient fund (NSF)
checks, hit a record high average $27.40, with 85 banks posting increases
and 32 decreasing account fees. AccountingWEB contacted customer service
agents at various banks and discovered that fee policies vary and it is wise
to check the policy in the city and state in which the account was opened.
If the account remains negative for a certain number of days, either a one
time or a daily fee may be assessed, depending on the bank policy.

To earn interest at an online bank and avoid
checking fees, it costs about half the balance required at a regular bank,
but the initial opening balance is higher, at $605. The monthly service
charge is also about half, $5.50 compared to $10.74. Although the online
interest rate is higher, Bankrate.com maintains neither rate seems worth
tying up the money which could yield more invested in other places.

The general advice to avoid fees is to shop around
and check out all of the fees at a bank before opening an account, choose an
account that fits individual needs, maintain minimum balances if required
and keep track of balances, including checks written and any money withdrawn
from the account through ATMs or account debit cards. This way the money
will remain in your account and not on the banks profit statement.

The North Palm Beach online financial service
surveyed 248 large banks and thrifts offering checking accounts, with 215
non-interest accounts and 247 interest accounts evaluated, using one
non-interest and one interest checking account each, in 25 large U.S.
markets.

Cheque kiting is
when in-transit or non-existent cash is recorded in more than one bank
account. The crime usually occurs when a bank pays on an unfunded deposit.

For example, a bum
check is deposited into an account. Before the cash is collected by the
bank, a check is written against the same account and deposited into a
second account, or cashed. The increased use of wire transfers allows this
type of scheme to be perpetrated very quickly.

At least two
companies solicit uninsured deposits on the Internet. Netware International
advertises itself as a "Constitutional" bank and FocusInternational.com,
Ltd., is a West Indies company seeking deposits for an unidentified bank.

They lure
depositors by offering high rates of interest, or promising offshore
secrecy. Neither company is authorized, supervised, or regulated by any U.S.
State or Federal bank or financial institutions regulator. Deposits in these
companies do not have the protection of the Federal Deposit Insurance
Corporation or any other state or federal deposit insurance.

One con, while in
jail serving a state prison term for credit-card theft, actually perpetrated
yet another credit card scam over a seven month period, using a technique
that allowed him to hide the fact that he was calling from jail.

He would start off
by calling the county-run nursing home saying he was a Bell Atlantic
technician and that he needed the person to dial a special code to test the
lines. When the person pressed the requested numbers, he would be connected
to an outside line that he used to call businesses.

When he called the
businesses, he would tell them he was a credit-card representative and that
he needed customers' names and phone numbers to verify recent transactions.
With that information he then called the cardholders and posed as a credit
company employee, saying he needed personal information to check for fraud.

With this personal
information and the credit-card numbers, he then requested and received more
credit cards with which he made about $25,000 worth of purchases of such
things as sports memorabilia, flowers, and gift certificates. He also bought
calling cards so he could continue the scam.

Some of the items
were given to other inmates in exchange for helping with the fraud while
other items were shipped to friends to be held for him until he got out of
jail.

Duplication of
Card Information

Credit card "double
scan" machines can copy info from the magnetic strip of your card and create
a new duplicate card for which your account will be billed for any
purchases. Try to keep your card in sight when possible to avoid this
problem.

While card issuers
have fraud detection software which picks up unusual spending patterns,
smaller purchase "skimming" can be subtle and prolonged, compared to the
flurry of spending when a card is stolen outright.

Keep a record
of your account numbers, their expiration dates, and the phone number
and address of each company in a secure place.

Void incorrect
receipts and destroy carbons.

Save receipts
to compare with billing statements.

Open bills
promptly and report any questionable charges promptly and also in
writing to the card issuer.

If you realize
they've been lost or stolen, immediately call the issuer. Many companies
have toll-free numbers and 24-hour service to deal with such emergencies.

By law, once you
report the loss or theft, you have no further responsibility for
unauthorized charges. In any event, your maximum liability under federal law
is $50 per card. If you suspect fraud, you may be asked to sign a statement
under oath that you did not make the purchases in question.

Booster Checks

A booster check is
a non-sufficient fund (NSF) check used to make a payment to a credit card
account. One group used "booster checks" to "bust out" legitimate credit
cards. They used credit card "convenience checks" issued by the banks and
credit card companies to inflate their credit card limits; or to "bust out"
the credit card to double or triple the established line of credit.

Because banking
laws require financial institutions to immediately post credit payments even
before the check has been cleared, they would use the window of time between
the posting of the credit card payment and the discovery of the bad check to
go on a spending spree and purchase, among other things, large amounts of
gold coins from legitimate coin vendors.

They would also go
to store owners who knowingly aided the bust out scheme, who would "swipe"
the credit cards through point-of-sale credit card terminals located at
their businesses. While these transactions would appear to be legitimate, no
merchandise would actually be exchanged.

Once a credit card
company transfers funds to a store owner's bank account, a collusive
merchant is able to dispense funds from the busted out credit card. The
merchants in this case allegedly issued kickback checks to the card holder
for the amount of the transaction, and they would then receive a kickback
from the card holder which would amount to a small percentage of the
transaction.

The Secret Service
estimates the total loss in this one case is between $10 million and $15
million.

Falsification of
Loan Applications

While scheming to
defraud four banks and a credit union, one con opened checking and savings
accounts using a false name and a fraudulently obtained new social security
number. He then applied for seven loans for the stated purpose of financing
the purchase of motor vehicles.

He also submitted
false documents concerning his employment and income, including fake tax
returns. By producing fictitious records including motor vehicle appraisals,
insurance documents and invoices he obtained approximately $380,000 in loans
for the purchase of a 1976 Rolls-Royce Silver Shadow, a 1978 Ferrari model
308 GTS convertible, a 1992 Mercedes-Benz model 300SE, a 1995 Mercedes-Benz
model SL320 and a 1994 Mercedes-Benz model 500SL.

He also applied for
and was issued multiple credit cards and charge cards. In just seven months
he ran up charges leading to losses of at least $460,000.

For example, he
used an American Express account to pay $27,000 towards the purchase of an
item of jewelry, used an MasterCard to place a $5,000 down payment towards
the purchase of a 1955 Mercedes-Benz 300SL Gullwing with a purchase price of
$203,000 and a 1964 Ferrari 250GT Lusso convertible with a purchase price of
$153,000, and then used the American Express account to pay $320,000 towards
the purchase of these two antique automobiles. He also used various VISA and
MasterCard accounts to obtain substantial cash advances and used the
American Express account to pay $93,600 towards the purchase of a Patek
Philippe Moon Phase watch with a purchase price of $95,600.

Laxity of
Enforcement

One of the problems
with enforcing bank fraud laws is that it is often relegated to a low
priority, or ignored altogether, because the activity can span several
jurisdictions, involve many unidentified subjects, is non-violent and
usually there are few leads.

Normally, the
typical bank robber nets $700 and is caught within 24 hours, yet the average
check scam involves losses of more than $2,000, the perpetrators are seldom
caught, and there are more than one hundred times as many cases as bank
robberies. Out of 10,000 cases the losses exceeded $60 million dollars.

Many bank fraud
suspects are able to elude arrest by furnishing false identification when
cashing stolen, forged, or counterfeited checks. One effort to stop this
crime is the "Check Print" program which requires non-bank customers to
provide a thumb print, using a clear solution, on the negotiated check for
identification purposes. With this positive identification, it has been much
easier to identify, arrest, and successfully prosecute bank fraud scams.

Check Security
Features

Check manufacturers
help deter check fraud by making checks difficult to copy, alter, or
counterfeit. Some useful security measures include:

Watermarks.
Watermarks are made by applying different degrees of pressure during
the paper manufacturing process. Most watermarks make subtle designs on the
front and back of the checks. These marks are not easily visible and can be
seen only when they are held up to light at a 45-degree angle. This offers
protection from counterfeiting, because copiers and scanners generally
cannot copy watermarks accurately.

Copy
Void Pantograph. Pantographs are patented
designs in the background pattern of checks. When photocopied, the pattern
changes and the word "VOID" appears, making the copy nonnegotiable.

Chemical Voids Chemical voids involve treating
check paper in a manner that is not detectable until eradicator chemicals
contact the paper. When the chemicals are applied, the treatment causes the
word "VOID" to appear, making the item non-negotiable.

High
Resolution Microprinting. High-resolution microprinting is very
small printing, typically used for the signature line of a check or around
the border, in what appears to be a line or pattern to the naked eye. When
magnified, the line or pattern contains a series of words that run together
or become totally illegible if the check has been photocopied or desktop
scanned.

Three-dimensional Reflective Holostripe. A holostripe is a metallic
stripe that contains one or more holograms, similar to those on credit
cards. Those items are difficult to forge, scan, or reproduce, because they
are produced by a sophisticated, laser-based etching process.

Security
Inks Security inks react with common eradication chemicals. These
inks reduce a forger's ability to modify the printed dollar amount or alter
the designated payee, because when solvents are applied, a chemical reaction
with the security ink distorts the appearance of the check.

Cooperation
between Check Manufacturers and Financial Institutions

Participating
financial institutions can report all checking accounts "closed for cause"
to a central database, called ChexSystems. This program prevents people, who
have outstanding checks due to retailers, from opening new accounts.

You can use this
information before opening new accounts to spot repeat offenders and you can
also use MICR information from a check presented with the applicant's
drivers license number to check the SCAN file for any previous fraudulent
account activity.

Rental Car and City Tax Rip Offs

Rental car companies have a sorry history for ripping off
customers with inflated and/or hidden charges. The most notorious ripoffs
were, and possibly still are, the rates charged for optional collision and
comprehensive (theft, storm damage, etc.) insurance. Renters should always
check on whether their credit cards used for renting cars covers this optional
insurance for no added fee. They should also check on whether the company
that insures their owned vehicles extends this coverage to cars rented.

The fuel option where renters can pay an up-front fee to avoid
having to pay for fuel when returning a car may be a bad deal. Always
compare the up-front fee with what the rental car company charges to fill the
tank when you return the car. Also compare those rates with what it costs
to fill the car just before returning the car.

Rip Offs in City Taxes
How cities sock it to visitors: New Rental Car TaxesAdded Fees Can Double the Price of a car
People who rent cars are getting hit with a host of new taxes that are being
used to pay for things like stadiums, museums and alternatives to renting a
car, such as monorail systems and rail lines.The fees are being levied to pay for things
like stadiums, museums -- and alternatives to renting a car, such as
monorail systems and rail lines. State and local lawmakers, many of whom
operate under balanced-budget mandates, got hit hard by the recent economic
downturn and have become more creative about looking outside their
constituencies for funding. Some of the new taxes are taking effect just as
travelers are making plans for the busy holiday season. That means they are
likely to sting even more, since many companies raise their rates around
this time of year.
Avery Johnson, "Travelers Hit With Slew of New Taxes on Rental Cars:
Added Fees Can Double the Price of an Economy Car," The Wall Street
Journal, November 9, 2005; Page D1 ---
http://online.wsj.com/article/SB113150004298391824.html?mod=todays_us_personal_journal

One Way to Possibly Avoid Extra Charges (if you are going to rent for a
significant number of days)

Because most of the taxes are being passed at the
local level, travelers face a hodge-podge of charges. Some fees, for
example, apply at the airport, but not in town. This means that travelers
can sometimes avoid taxes -- either by taking a cab across city lines or
flying into an airport where the fees are lower. But sometimes the quest to avoid the fees can be more
expensive than the charges themselves.

The increased use of rental-car taxes was touched
off last year in Kansas City, Mo., when the city passed a new fee of $4 per
day on cars rented in the city limits. The money is going to help fund a new
sports arena. Then in April of this year, Arlington, Texas, put a 5% tax on
cars rented in the city to fund a new stadium for the Dallas Cowboys
(Arlington borders Fort Worth). Indianapolis increased its rental car tax
from 2% to 4% on rentals within the city limits as of July 1. Last month,
Revere, Mass., a town about a mile from Logan Airport outside Boston, added
a new $10 tax per rental-car transaction to fund an $18.5 million
police-and-fire station. Tom Ambrosino, Revere's mayor, says that rental
cars should be taxed because they add wear and tear to the roads and create
more traffic and pollution.

David Bach's "Latte Principle" ---
Click Here
A Penny Saved Compounds to Much More Than a Dollar EarnedJim Mahar provided the following two links:

I'm
convinced that for the average
person who wants to build wealth,
pennies count.

Pennies
have a funny way of snowballing into
dollars, and then hundreds, and then
thousands, especially if you use
them to buy the stocks of
well-managed companies. Consider the
story of a parking attendant who
earns $20,000 a year but has amassed
a $500,000 equity portfolio. Or the
one about a group of New Yorkers who
managed to save for a down payment
on a (very expensive, very tiny)
piece of the Big Apple. Or the clan
of seven dubbed "America's cheapest
family," who paid off their mortgage
in nine years on a salary of $35,000
a year.

I've seen article after article bashing
David Bach's "Latte Principle" -- the
idea that if you save on small spending
you can amass a large amount of wealth.
The main argument against it is that
people should be paying attention to
large expenditures -- that's where the
real difference is made. But Bach isn't
saying to ignore the expensive decisions
in life. He's just aware that for many
of us there are small amounts we spend
every day without really thinking about
how much they end up costing us. And
that if we just limit a few of them and
save that money, we can save a good
amount throughout the years.

Now of course I wouldn't suggest that
someone cut out everything and eliminate
all of life's pleasures. After all, we
should use part of our money to enjoy
ourselves. But for those people out
there looking for a way to save a bit
extra, for those who simply "can't make
it on what I earn", and for those who
would simply like to pay down their
debt, this is a pretty good list to
consider cutting down on -- even if it's
for a short period of time. And you
don't have to eliminate each of the
items above, simply consider cutting
back on them. There's still tons of
savings available by cutting your car
washes, manicures, or alcohol
consumption in half.

Jensen Comment
Of course eliminating all the above would not necessarily be wise. If there's
five feet of snow on the ground, I'm not about to wash my own car. Yet getting
the car washed in winter is more important than in summer if you live where they
salt and sand the roads. Spending $358 each winter car washes may well save
thousands if you can, thereby, double the life of your car.

New cars
lose 60% of value in the first four years. Most people waste more money on cars and interest charges for car
financing than any other single cash drain in their lives, including the cost of
housing. Cars are a necessity of life for most of us who have no convenient
public transportation alternatives. But frequent trading in of good cars for new
cars is a monumental mistake in finance. Leasing is also a synonym for
stupidity. Insiders call it "fleecing
a car." But I'm grateful for ignorant people who are constantly turning in
good owned or leased cars. Most of the cars I've owned over the years were
turned back leased cars. Great mechanics put my previously-owned or
previously-leased vehicles back in top shape, and I save a bundle relative to
their prior owners. If you must finance your next vehicle, please be a smart
shopper and be informed how dealers cheat ---
http://www.trinity.edu/rjensen/FraudDealers.htm

I lived in San Antonio for 24 years where over
500 cars per month are stolen. See the video ---
http://www.youtube.com/watch?v=TQPSXCqBqz4
My answer was to buy an old car (usually a station wagon) and make it look even
less desirable to the thousands of car thieves cruising about San Antonio by day
and by night. Little did thieves know that underneath the hood was a new power
train and other features that made my old heaps just like new. I always remember
a comedy show that featured a company in Los Angeles that would ghettoize a new or relatively-new car to make it look like a junk yard dog. My city cars were like that. My
wife and I were more safe since our cars were of little temptation to
carjackers. But my children generally crouched down in the seats or asked to be
let out a block away so their friends would not see them in my cars.

Next to car financing, the biggest mistake most people make is credit card
financing to a point where they seldom zero out what they owe on credit cards.
This is the "dirty secret" of that makes credit card companies suck billions
upon billions of dollars out of the economy ---
http://www.trinity.edu/rjensen/FraudReporting.htm#FICO
When we're about to go on long trips, I overpay monthly expenses ahead of time
so that if we're delayed in returning home we never have to worry about being
charged interest or late payment penalties. For example, I put huge credit
balances into our credit card accounts before going on a long adventure.

Do I buy into David Bach's "Latte Principle?"
Well yes and no. I do not believe in Spartan living so I can watch my savings
grow for the sake of watching my savings grow. I don't drink latte, but I also
opt for four-star or five-star hotels or lovely country inns when my wife and I
are on adventures. Expensive restaurants are generally wastes of money, but we go to them
when the mood is right and/or the friends we're with prefer a top restaurant.
Often you can eat just as well in the hotel's lounge as in the expensive
restaurant down the hall. There's a huge difference between what you splurge for on daily (like credit
card interest and latte) versus what you splurge for infrequently. When I used
to come home at night and have a couple of drinks daily, I drank cheap Boca
Chico rum in my cubalibras. Now that I don't drink daily, I splurge on fine wine
and expensive liquor once in a while.

In the final analysis, I would have to say that I live better in retirement
because I pretty much followed the "Latte Principle" before it was called "Latte
Principle." Most of my travels in life were
financed by others who made me sing (lecture) for my supper, but I enjoyed
the fellowship and strokes of these types of trips more than I did boring
leisure vacations. I spent as much as I could possibly afford on land and
houses, but these generally returned more than I paid for them. I spent as
little as possible on cars and preferred to buy finely-tailored suits in upscale second hand shops
(look for Second Looks in San Antonio and Austin).. I think most of the former owners
of my suits had passed on in life.

I never argue with my wife over money even when she tips almost as much as
the check itself. I never object when she hands out ten dollar bills to
receptionists, postal clerks, trash haulers, window washers, and bell
ringers outside the Wal-Mart stores. She's thrifty but likes a lot of new things
she generally buys on sale. She seldom shops in stores. But the UPS truck stops up here in the mountains
nearly every day. While my wife is wearing the "8" and "0" buttons off on phone in our den
(mostly she orders gifts), I'm on the computer ordering everything from books to
groceries to space heaters from
Amazon.com (a great, great place to shop). Our UPS driver's name is
Joe, and if I'm not at home he comes into the basement and assembles what he's
just delivered. Will your UPS driver do that?

I truly got my money's worth out of faculty clubs. I would've joined
expensive country clubs but I never had time for a round of golf even once a
week. Such is the price one pays for being a workaholic.

It's easier for a workaholic to live by the "Latte Principle." But most of us
workaholics are doing what we like best.

When my husband was in training to be a police
chaplain, the trainer began talking about the issue of stolen cars by
pointing to my husband and saying, “What kind of car do you drive?” Rob, my
husband, responded, “A ’99 Saturn wagon.” The police trainer told him, “You
can leave the keys in your car.”

INSTEAD OF LAYING A chocolate on your pillow, many
hotels have decided to present you with a markedly more unwelcome treat: sneaky
fees that can easily increase your bill by 20% . . . Charges have become a
common way to bolster revenues while keeping advertised room rates low, says
Robert Mandelbaum, director of research for PKF Consulting, a hotel-industry
research firm. "Surcharges of one degree or another have been in the industry
awhile now," he says. "It looks better than raising the room rates." Surcharges
also tend to move in cycles, says Mandelbaum. "It's supply and demand," he
explains. "If you want a room in a market like Manhattan, with an 85% occupancy
rate, you basically have to pay whatever the hotel wants you to." In slower
markets and off-seasons, hotels are less likely to tack on fees because there's
more competition for guests.
"Hotel Heists," by Kelli B. Grant, Smart Money, February 13, 2006 ---
Click Here

Academic Conferences that Rip Off Colleges: Do you
really want to participate in these frauds?

I've written about this before, but I want to elaborate.
Academics either unwittingly or willingly sometimes allow themselves to get
caught up in fraudulent "conferences." Spam is on the rise for these
frauds. The degree of fraudulence varies. At worst, there is no
conference and organizers merely charge an exorbitant fee that allows the paper
to be "refereed" and published in a conference proceedings, thereby giving
a professor a "publication." See
http://lists.village.virginia.edu/lists_archive/Humanist/v18/0633.html

Even when the conferences meet, they may be fraudulent.
Generally these conferences are held in places where professors like to travel
in Europe, South America, Latin America, Las Vegas, Canada, the Virgin Islands,
or other nice locations for vacations that accompany a trip to a conference paid
for by a professor's employer. The professor gets credit for a
presentation and possibly a publication in the conference proceedings.

But wait a minute! Here are some warning signs for a
fraudulent conference:

Even though there is a high registration fee, there are no
conference-hosted receptions, luncheons, or plenary sessions. The
conference organizer is never called to account for the high registration
fee. The organizer may allude to the cost of meeting rooms in a hotel,
but often the meeting rooms are free as long as the organizer can guarantee
a minimum number of guest who will pay for registered rooms in the hotel.

All or nearly all submissions are accepted for presentation.

The only participants in most presentation audiences are
generally other presenters assigned to make a presentation in the same time
slot. There is virtually no non-participating audience. Hence
only a few people are in the room and each of them take turns making a
presentation. Most are looking at their watches and hoping to get out
of the room as soon as possible.

Presenters present their paper and then disappear for the
rest of the conference. There is virtually no interaction among all
conference presenters.

The papers presented are often journal rejects that are
cycled conference after conference if the professor can find a conference
that will accept anything submitted on paper. Check the dates on the
references listed for each paper. Chances are the papers have few if
any references from the current decade.

These conferences are almost always held in popular tourist
locations and are often scheduled between semesters for the convenience of
adding vacation time to the trip. They are especially popular in the
summer.

August 31, 2006 reply from Bob Jensen to a professor who
proposed rating conferences.

Hi XXXXX,

Publishing ratings of conferences will be almost impossible due to
endless debates that will arise over defining criteria.

I wish you luck if you carry through with this effort, but I think that
it will be very difficult to shut down fraud conferences. Organizers of
fraud conferences are very good at their craft, and the professors who
attend them are desperate for new lines on dusty old resumes. The professors
who attend are often very good teachers frustrated with blank spaces each
year by blank spaces for evidence of research in their performance reports.

Hence, the "teachers" who attend fraud conferences will continue to do so
even if you take the time and trouble to warn them. These professors want
the lines on a resume and an expense-paid vacation in a terrific tourist
locale. Interestingly, many of these professors justify this by truly
believing that they are badly underpaid and are fully justified for
reimbursed travel for R&R if nothing else.

Since you are only listing the good conferences, college deans and
administrators will not necessarily be forewarned of the bad conferences
since you can't be expected to list 100% of the good conferences in all
fields of business, finance, and economics. Most fraud conferences in our
discipline are very generic and cover all fields of business and economics.
It will be very difficult to track over 1,000 conferences (most legitimate)
across such a wide path.

I think the best we can do is plead with the academy, and possibly our
reimbursing colleges, to demand accountability of registration fees for
conferences. They should be treated a bit like charitable organizations
where conference organizers must give an expense accounting and disclose how
much of the conference revenues go to personal profit and "administrative
expense."

Bob Jensen

Added September 9, 2006 by Bob Jensen

The issue in general is not one of reviewing papers
or possibly even acceptance rates.

It is important to provide a listing of the names
and affiliations of the reviewers who screen submitted papers. If the
reviews are only conducted by the conference organizer, or employees of the
organizer, then the review process is highly questionable.

The main issue for all academic conferences should
be accountability and transparency of the registration fees and possible
sharing in hotel room rates by conference organizers (which is not common).
It's common for hotels to provide free meeting rooms if there are a
sufficient number of paying guests in the hotel. In fact there are usually
no fees for the meeting rooms other than fees for beverages --- some
questionable conferences will not even provide beverages for sessions.
Without beverage, meal and reception costs, there are very few fees for
organizing many conferences other than the cost of the name tags and
possibly the cost of having someone register participants (which is often
the same person who organized the conference).

It's become much cheaper to advertise conferences in
the days of email. If proceedings are published only electronically, the
cost of compiling proceedings is minimal for papers submitted in MS Word.

Another issue is audience size. Are there any
keynote or plenary sessions with large audiences? Are the concurrent
sessions of a decent size or are most audiences comprised mainly of
presenters in the same scheduled session? For example, if there are four
presenters, is the average audience size larger then eight? How many remain
when the last speaker begins to present in most sessions?

How many speakers remain to participate in the
conference after they have made their presentations?

How many scheduled speakers don't show up at all? I
know of some well known accounting professors who got their travel to Europe
or elsewhere paid by their universities and then don't even show up for the
conference. They sometimes report to their colleges that plane or train
delays prevented them from reaching the conference even though they did
manage to visit the homes of their friends or relatives. Often they paid the
registration fees in advance which thereby become wasted money.

It's all a matter of personal ethics!

Bob Jensen

Question
Is your academic association negotiating a good deal for conference hotel rooms
and airline fares?

The
National Association of College and University Business
Officers last week nailed at least $4 million to the fall
tuition bills going out to strapped families and students
this month. NACUBO gathered more than 1,000 higher education
business officers and 200-plus vendors at a Mardi Gras in
New Orleans.... I mean, an annual meeting, “Crossroads: New
Beginnings Built on Valued Traditions.” Those traditions
being, for example, free food, an umbrella from Microsoft in
the registration bag and a golf tournament with the Beverage
Cart sponsored by Higher
One, a cash-card company, I think.

. . .

Did NACUBO
negotiate premiums as high as 58 percent for hotel rooms in New Orleans? I
was looking up prices on Web hotel sites, and I scrolled down to the
featured hotels on the NACUBO pages. I thought I’d made a mistake – NACUBO
prices were higher. How hard can negotiating a deal be in Katrina-ravaged
New Orleans? Take a look.

NACUBO Price

Web Price

Difference

Premium

Hilton

$175

$119

$56

47%

Wyndham

$169

$109

$60

55%

W New Orleans

$169

$107

$62

58%

Marriott

$167

$129

$38

29%

. . .

I have yet to
meet anyone who accepts accountability for the ever-rising
costs of a higher education. As a society, we’ve never known
more about the mind and learning and cognitive science. New
knowledge and great need in other fields breed innovation.
How about a better way to deliver an education? The
four-year bachelor’s degree, the big cost driver in higher
education, is a construct from the University of Bologna in
the 1400s. The pedagogical constraint was the virtual
absence of books. Education required gathering students in a
room and the professor reading the book to them. I pitched
this idea many times to NACUBO chiefs. Not the answer, but
let’s tackle the question. No luck, and costs keep rising,
and back interest on student loans compounds.

Continued in article

Jensen Comment
Years ago, a well known academic Association in which I'm a member negotiated
airline fares (to a conference in Hawaii) from a Florida travel agency that were
much higher than fares available directly from the designated airline (Delta)
without going through the Association's "special fare" travel agent. Complaints
from the membership subsequently led to various happenings including the
dropping of that travel agency used for years by the Association.

It may be difficult for the average consumer to
evaluate the sometimes grandiose claims that various supplements, vitamins,
and other such products make on their labels and such. One way to learn
about products is ConsumerLab.com, which provides independent test results
and information in order to assist consumers and healthcare professionals to
evaluate such products. The casual visitor will want to begin by looking
over the "Latest Results" area on the homepage, which provides some
information on their recent tests on melatonin sleep supplements and other
related nostrums.

Visitors looking for information on specific
products will want to direct their mouse to the "Laboratory Test Results"
area. Here they can look through a list of product evaluations that include
nutrition bars, ginkgo biloba, and the ever-popular echinacea. The site is
rounded out by a very nice area on "Recalls and Warnings, which (as its name
suggests) includes information on recent notices posted by the Federal Trade
Commission and other such agencies.

"The EPA tests don't correspond to the way most of
us drive," Kleman said. "Their tests represent driving on a 75-degree day on
a road with no curves or no hills, which is ideal for maximizing fuel
economy."

The EPA tests haven't changed in 30 years, so they
don't take into account today's driving conditions. There's a lot more
congestion, idling in traffic, and widespread use of air conditioning.

Consumer Reports runs its own fuel economy tests.
The engineers say these tests—done outdoors—give a much more accurate
assessment of the actual mileage you'll get from a car.

Consumer Reports' tests often turn up results that
are substantially different from the EPA's—especially for stop-and-go city
driving.

For instance the EPA says you'll get 22 miles per
gallon with a Jeep Liberty diesel, but Consumer Reports found you'll get
just half that—11 miles per gallon.

With a Chrysler 300 C, the EPA says you'll get 17
miles per gallon, but Consumer Reports' tests get only 10.

As for a Honda Odyssey minivan, the EPA gets 20
miles per gallon; Consumer Reports gets just 12.

The differences Consumer Reports turned up with
hybrids in city driving are even greater. The EPA says the Honda Civic
hybrid gets 48 miles per gallon; Consumer Reports measured just 26.

Continued in article

Free Lunch, Dinner, and/or Night in a Post
Resort

Beware of those offers of a free lunch, free dinner, free night
in a condo, etc. that end up being high pressure sales affairs that pray on the
elderly and other vulnerable sectors of society.

Who's Preying on Your Grandparents?Back in February, Jose and Gloria Aquino received a
flier in the mail inviting them to a free seminar on one of their favorite
topics: protecting their financial assets. As retirees, they were always on the
lookout for safe investment strategies as well as tips on how to make sure they
didn't outlive their savings. Besides, the flier promised a free lunch for
anyone attending the workshop, so what did they have to lose? Potentially
plenty, they would soon discover.
Gretchen Morgenson, "Who's Preying on Your Grandparents?" The New York Times,
May 15, 2005 ---
http://www.nytimes.com/2005/05/15/business/yourmoney/15vict.html?

Protect Yourself From Pretexting

"'Pretexting' is common in business world," by Peter Svensson,
Yahoo News, September 13, 2006 ---
Click Here

Although the boardroom scandal at Hewlett-Packard
Co. made the practice more widely known, buying phone records or other
personal information obtained by "pretext" calls appears to have been common
in parts of the business world. ADVERTISEMENT

In a letter to the House Energy and Commerce
committee, which was investigating the issue this year, data broker PDJ
Investigative Services described its customers as "law offices, repossession
companies, financial institutions, collection agencies, bail enforcement
agencies, law enforcement agencies and various private investigation and
research companies."

"Those businesses have a common need. That need is
to be able to locate individuals, who do not wish to be found," another data
broker, Universal Communications Co., wrote to the committee.

For example, banks sought to find debtors who
defaulted on loan payments, and car finance companies traced people who
stopped paying their auto loans and disappeared, Universal Communications
said.

PDJ sold records of local and long-distance calls
as well as non-published phone numbers and home addresses, according to an
old price list submitted to the House committee.

In its letter, PDJ said it did not perform pretext
calls itself, but paid independent vendors for the information, or searched
public databases and the Internet.

Robert Douglas, a privacy consultant in Colorado
who closely follows pretexting and other investigatory techniques, said such
independent vendors use sophisticated methods to fool customer service
representatives into giving out information.

However, the attention given to pretexting in the
past two years — the HP scandal is just the latest in a series of
revelations — has made data brokers restrict sales of certain kinds of
information. Cell phone companies, one of the major targets of pretexters,
also have fought back by launching lawsuits.

Pretexting has long been a tactic used by private
investigators and others to obtain personal information and records about
people. Also known as "social engineering" in the hacker realm, it involves
using ploys to obtain data and documents.

The ploys range from the creative to the
straightforward. In the Hewlett-Packard case, outside investigators hired by
the company simply posed as the victims -- HP board members and journalists
-- to obtain their phone records from phone companies.

On the more inventive side, Verizon Wireless last
year accused online data brokers of making
hundreds of thousandsof calls to the company's
customer service lines posing as fellow Verizon employees with the company's
"special needs group," a nonexistent department. The callers obtained
customer account information by claiming to be making the requests on behalf
of voice-impaired customers.

Against that kind of initiative, it seems like
there's little an ordinary consumer, Silicon Valley director or tech
journalist can do. But there are some options.

Buy a TracFone. There's a reason
law enforcement agencies hate disposable cell phones: They don't keep a call
detail record. This solution isn't convenient or desirable for everyone, but
if you're concerned about your phone records being obtained fraudulently by
third parties, or subpoenaed by authorities, a prepaid phone service offers
the best privacy.

Prepaid phones range in cost from $20 to $80 and
usually come with a set number of minutes to start, which can be augmented
by purchasing prepaid calling cards for $20 to $100.

Naturally, your prepaid phone number will still
appear on the calling records of people you call, and who call you. But
because the prepaid services don't require you to provide your name, the
phone number alone will be of limited use to snoops. Be sure to pay for your
phone and prepaid phone cards with cash, and only add minutes through the
phone's built-in interface -- don't use the service provider's website,
which could track your IP address.

Don't Tell on Yourself. A little
bit of information can help scammers get a lot more; in the HP case, the
investigators used the last four digits of their targets' Social Security
numbers to authenticate themselves to the phone companies they tricked.

That's why the FTC advises consumers to guard
personal information such as Social Security numbers, birth dates, account
numbers and passwords to prevent someone from using the information to
impersonate you and obtain your records. To that end, don't provide personal
information over the phone, in an e-mail or in person to anyone unless you
initiated the contact. Even then, be guarded about providing legitimate
agencies with more information than they need.

Choose Your Own Passwords.
Companies love using Social Security numbers and dates of birth as
authentication, despite the fact that neither bit of info is very private.
Insist that your health insurance provider and phone companies allow you to
use a customer-designated password or a unique identifying number instead.
Don't let them bully you into using your Social Security number, and use
different passwords for different accounts.

Shred It. Cross-shred documents
that contain personal information before discarding them, and do not
leave such documents lying around where maintenance workers and visitors
can see them.

Leave Your Vital
Stats Offline. Do not publish your birth date or other
personally identifiable information about you or your children on your
MySpace or Facebook page. It's obvious, but worth repeating.

Don't Pay Bills Online. Yes,
we know it's convenient, and we know that banks and utility companies
pressure customers to establish online billing accounts to eliminate the
cost of paper records. But resist the urge. Online accounts put you at
risk no matter what businesses say.

Websites are seldom as secure as companies
insist they are. Even when they are secure, smart people like you can
sometimes still get tricked into using a spoof site that looks exactly
like the real thing, or wind up with malicious software that records
every keystroke on their computer and passes the info on to a hacker.

While we're on the subject, don't file your
taxes online either. Yes, it's convenient. No, it's not secure. It's
possible that hackers can obtain the same information by hacking a
vulnerable data server or stealing an employee laptop, but that's out of
your control. How you file is in your control.

See If You've Already Been Hit.
In an internal investigation of pretexted records, AT&T identified about
2,500 of its customers as possible victims. And that's just one phone
company. To find out if you've already been a victim of phone record
pretexting, contact your telephone company in writing to determine if
anyone has requested your records. If you've pissed off HP recently, do
it today.

Lobby for Change. Pressure
your congressional representatives and the FCC into forcing phone
companies to improve the security of customer records. The Electronic
Privacy Information Center offers a number of
suggestionsfor boosting security, include
forcing carriers to maintain an audit trail to track whenever a
customer's records are accessed, and by whom.

EPIC also suggests that phone companies be
required to notify customers when someone has breached their records.
Phone companies, in recent lawsuits against pretexters, have admitted
being duped hundreds of thousands of times into handing over customer
records to unauthorized people. Yet current breach-notification laws
don't cover these records, since they're not considered personally
identifiable information.

Additionally, phone companies should be forced
to notify customers of changes to their account, such as when someone
establishes a new online billing account for their phone number. Many
banks already send written verification to customers by mail if the
customer or someone else requests a change to their account password or
contact information. Had AT&T done this, HP board member Tom Perkins and
others caught in the HP investigation would have been alerted back in
January that someone was trying to access their records online.

"Giving Freely—And Wisely: One site names preachers who may be
misusing money and suggests that you 'prayerfully' consider giving to other
ministries instead," Jane Bryant Quinn, Newsweek, December 18, 2006, Page
51 ---
http://www.msnbc.msn.com/id/16127630/site/newsweek/

Unfortunately, you can't always believe what the
(IRS Form) 990 says. It's supposed to show how much
the nonprofit spends on actual services, as opposed to fund-raising and
administration. But the law isn't much enforced. In a report covering part
of the 1990s, the General Accounting Office found that 64 percent of public
charities claimed to have zero—zero!—fund-raising expenses. Do you believe
that? Neither do I.

Some of the rating services
adjust for these problems. Uncharitably, they often slam each other's
methods while touting their own. I'm a civilian in these wars, so my advice
is to look for good grades from every source. Start your research here:

1. The Better Business Bureau Wise Giving Alliance (Give.org).
It currently posts reports on more than 900 nonprofits, testing them by a
number of standards including good governance. About 65 percent of them
pass. The rest fail, or refuse to be evaluated (a bad sign, no matter what
excuse the charity gives).

2. American Institute of Philanthropy (CharityWatch.org).
It's the toughest of the bunch, rating more than 500 charities on a scale of
A+ down to F. Because it disregards certain, potentially suspect, expenses
and donations, it fails some nonprofits that the other raters approve.
Readers of this column can get its latest Charity Rating Guide free from AIP,
P.O. Box 578460, Chicago, IL 60657.

3. CharityNavigator.org rates 5,100 nonprofits on a
scale of zero to four stars. This site draws only from a nonprofit's latest
990 form, which could mislead. But I like its Top Ten lists, such as 10
Charities Overpaying Their For-Profit Fund-Raisers.

4. MinistryWatch.com rates more than 500 evangelical
groups on a scale of 1 to 5 stars. It's an ardent advocate for financial
disclosure. The site names preachers who may be misusing money and suggests
that you "prayerfully" consider other ministries instead. Withholding that
advice, says MinistryWatch.com, would be "tantamount to condoning sin."
Hear, hear.

5. The Evangelical Council for Financial Accountability
(Ecfa.org) accredits Evangelical churches and charities based on such
standards as audited financial reports and ECFA's own field reviews. If your
group hasn't joined (or is on the lists of those that left) you should ask
why. There's no comparable service for Jewish, Muslim or Catholic
organizations.

You'll find other sources. GuideStar.org gives no
ratings, just access to 990s for nearly 700,000 charities. Pennsylvania's
Department of State lists nonprofits that ran into trouble there. They may
be fund-raising in other states.

Still, most people donate simply because someone
asks them to, says William Meehan, chair of Philanthropic Research, parent
of GuideStar. Charity ratings haven't had much impact, because they're
flawed and not enough people follow them. Besides, the ratings don't help
you choose among similar charities. For that, you need to know how well they
do their jobs. That's the next step—and a new Web site should help it along.
Watch for GreatNonprofits.org, launching next spring. People familiar with
specific charities—clients, donors, staff and volunteers—will be able to
post opinions there, for you to read before you decide to give.

Make the
business of giving your business. If you’re a consumer or a businessperson,
it’s important to know where your donation dollars end up. Ask questions
about the nature and activities of the organization to which you’re
considering donating. That’s the only way you can be sure the money you
contribute will support a worthwhile cause. And if you work for a nonprofit
organization, you need to know what are acceptable solicitation practices.

Throughout the year,
and especially during the holiday season, you probably get appeals in the mail
or by telephone urging you to contribute financially to a good cause. But the
U.S. Postal Inspection Service warns those who want to give that there are
plenty of fraud operators out there who are scheming for your money--and the
last thing on their mind is charity. Not only do such come-ons bilk you of
your money, but they also put money you intended for the needy into the hands
of con artists.

But just how do you
know who is legit and who isn't? The Salvation Army and the American Cancer
Society--those are among the obviously worthy organizations. But what if you
receive a charitable solicitation from an organization you've never heard of?
To guard against being taken advantage of, the Postal Inspection Service
offers the following guidelines when donating to charities:

Check out
organizations you're unfamiliar with, or whose names are similar to well-known
charities. You can do this by visiting the Bureau's
Wise Giving Alliance Web site, or by contacting them at this address:

If you're unfamiliar
with the charity, ask for its annual report and financial statement. If the
organization is not willing to provide these financial documents, you should
immediately be suspicious.

Make checks payable
to an organization only--never an individual.

Be suspicious of
solicitors who say they will accept your donation in cash only. (Con artists
want cash so there will be no paper trail for authorities to follow.)

Report any
suspicious organizations to your local postmaster or Postal Inspector.

The Postal Inspection
Service encourages giving others a helping hand, but cautions those who give
to make sure that the organization they're giving to is a legitimate charity,
and not one that was set up for the sole purpose of bilking the public.

Cyber-begging is not new, but a free web service
called Dropcash has linked data from payment service PayPal with that of
blogging system TypePad to make it even easier to create your own
fundraising webpage - complete with progress bar.The Guardian, September 9, 2004

Here's a guide to finding -- and
interpreting -- charity information on the Web.

WATCHDOG SITES

Your first stop when researching a
charity should be a watchdog site. These groups offer information about
nonprofits and often rate their efforts.

Remember, though, that these sites
come with some important caveats. Many of them rely on information in
charities' IRS returns, called Form 990s. And that information can be quite
old by the time the watchdogs get it. Charities file their returns as much
as 11 months after the end of the fiscal year, and then it can take months
for the IRS to process the form and make it available. Meanwhile, if the
charities aren't forthcoming on their IRS return, the watchdogs' data and
analysis will end up skewed.

With that in mind, here's a look at
some of the best information sources out there.

CharityNavigator.org, provided by the nonprofit
group Charity Navigator in Mahwah, N.J., rates more than 5,000 U.S.-based
charities, using information in their Form 990s. The site is free to people
who register.

For an idea of how the rankings work,
consider the group's take on United Way of America. The charity, which is
based in Alexandria, Va., gets three stars out of four for "Efficiency," in
part because 90% of its budget went to programs, and it cost only two cents
for the program to raise a dollar.

The organization also gets three
stars of four for "Capacity," or its ability to sustain itself over time.
The group had annualized revenue growth of 21% from 2002 through 2005 and
had enough working capital to operate for about eight months without any
income.

If you want to look at the raw data,
GuideStar.org, a product of Philanthropic Research
Inc., in Williamsburg, Va., is the go-to organization for copies of a
charity's Form 990. It covers 1.7 million groups and has about 3.1 million
Form 990 images, many of which are available free to people who register.

The site makes money from a
combination of donations and subscriber fees, so not all of the content is
free. For instance, a prospective donor can see that the March of Dimes
Foundation wanted to continue a $75 million education, awareness and
research campaign on premature birth in 2006, and that it has more than
1,000 employees.

To get other details, such as the
charity's income and assets, you need a subscription. That will run either
$30 or $100 a month, depending on the depth of information you want and
other factors.

Give.org, operated by
the BBB Wise Giving Alliance in Arlington, Va., reports on whether the
approximately 1,200 charities it has evaluated meet the alliance's 20
"Standards for Charitable Accountability." It doesn't do ratings or
rankings.

The group's free reports provide
information on who runs a charity and list its income, expenses, assets and
sources of income. The reports also describe the group's programs; in some
cases, this includes a breakdown of how much the group spent on them.

To meet the alliance's standards,
organizations have to do everything from spend at least 65% of total
expenses on programs to provide a clear privacy policy online. Charities
that come up short will have a report on exactly where they failed.

The NAACP, for instance, fails on
three standards, the site says. Its annual report doesn't include the
recommended financial information, it doesn't include financial information
or a recent Form 990 on its Web site, and it doesn't have a privacy policy
with the recommended information on its Web site. Give.org says it was
unable to evaluate six other standards, because it's waiting on an
information request to the NAACP.

The NAACP says many of the requested
items -- like the annual report and privacy policy -- are on the site, even
if they lack the level of detail desired by the alliance. It says the
group's Web disclosures are in line with its peers and that more specific
information, like a copy of the Form 990, can be obtained by contacting the
NAACP directly.

Moreover, an NAACP spokesman points
out that each watchdog site has its own criteria and agenda, which can make
it difficult for nonprofits to satisfy every set of standards. He recommends
checking multiple sources to get a more accurate picture of the
organization.

FIGURING IT OUT YOURSELF

So, what if the charity you're
interested in hasn't been reviewed by a watchdog group?

First, get some information at the
IRS site,
IRS.gov. Search for Publication 78, which has a
list of nonprofit groups that qualify for tax-deductible donations. Next up:
Request a Form 990. The IRS return, required by most organizations with
annual revenue of more than $25,000, will have much of the financial
information you need.

100% of its money on programs
isn't likely to have much longevity, but a program that spends too
little could be more interested in enriching staffers then helping the
underprivileged.

But be careful when weighing
ratios, says Charity Navigator President Trent Stamp, since the expected
program expenses vary depending on the work that's being done. Food
banks, for instance, devote a higher portion of expenses to programs,
say 90% or so. Museums, in contrast, spend about 70% of the budget on
programs.

So, if you're investigating a
charity, compare its numbers with those of another group that's closely
related. For instance, you might compare the Committee for Missing
Children in Lawrenceville, Ga., with the National Child Safety Council,
since the groups do similar work and have similar revenue. You would
find that the two have strikingly different spending ratios: The
Committee for Missing Children spends 11% of its budget on programs and
87% on fund raising, according to IRS returns, while the National Child
Safety Council spends 81% on programs and 7.8% on fund raising.

David Thelen, chief executive of
the Committee for Missing Children, says the fund-raising costs seem
disproportionately high because the group has to rely on pricey
telemarketing. He says the group doesn't have the same cachet as larger
organizations, which has made it difficult to get corporate donations or
gifts from individuals that aren't solicited by a third party.

It's also important to make sure
the IRS return accurately conveys the organization's behavior, and isn't
full of one-time expenses. A charity may have low program spending one
year because it's investing in a new computer system that is going to
make the organization more productive down the road, for instance.

In the case of the Committee for
Missing Children, IRS returns for the past three years show that program
expenses were less than 10% of the budget in 2005 and 2004. The National
Child Safety Council, by contrast, spent just 58% of the budget on
programs in 2004, but the number increased to 75% in 2005 and 81% in
2006.

Mr. Thelen at the Committee for
Missing Children says that while the program percentages may seem small,
it doesn't change the fact that the money is going to good use. That 10%
or so distributes pictures of missing children, provides literature on
child recovery and connects parents with help here and abroad.
Meanwhile, the National Child Safety Council says it understated program
spending prior to 2005, due to a misunderstanding of IRS rules.

If the charity seems to be having
an off year, call or email to find out why. The nonprofit may have a
great reason. But if it answers with a fuzzy explanation or won't take
the call, it may be time to move on.

Checking executive salaries,
which are listed on the Form 990, can also be helpful. Donors are
sometimes dismayed by what they perceive as exorbitant wages, but it's
important to take the numbers in context. Many nonprofits are complex,
multimillion-dollar organizations that require experienced managers -- a
labor pool that isn't cheap.

If a salary seems high, check
salaries at charities that are doing similar work and that are a similar
size. The alarm bells shouldn't start ringing unless executive
compensation is out of line with comparable organizations.

Donors who check the Form 990 may
also want to look at the list of "Officers, Directors, Trustees and Key
Employees" toward the middle of the form. An organization that has
multiple family members on the payroll as directors, or that pays the
president a nominal amount but shells out hundreds of thousands of
dollars to someone in a lower-level position, deserves some extra
scrutiny.

It's also a good idea to do a Web
search on the organization and its officers, since the mainstream media
-- along with bloggers and forum members -- often flush out problems
before the IRS pulls a charity's tax-exempt status.

A short conversation with a
staffer can also be helpful. Ask whether the organization has a written
privacy policy that's available for review. (Sometimes nonprofits will
sell the names of donors who contribute nominal amounts, say $10 or
$50.) Also look into progress the organization made the previous year
and check its goals for the year to come. Someone in the group should be
able to answer those questions in a clear way.

SHARING THE WORK

Vetting a charity may seem
daunting, or too time-consuming. But people with charitable inclinations
don't have to go it alone. A number of donors are joining "giving
circles." Members generally pool money and divide the research among
members of the group. The idea has gained popularity in recent years,
with the Forum of Regional Associations of Grantmakers in Washington
identifying more than 400 giving circles in 2006, up from about 200 in
2004.

The circle investigates charities
as a group and then decides how to distribute the money. In some
circles, decisions are made by consensus, while others let majority rule
or let individual members vote with their dollars.

Margae Diamond, an executive at a
donor-advised fund in San Francisco, joined the Traveling Giving Circle
to Kenya, a project of the Clarence Foundation, last year. The group
went to Africa and visited six charities in six days. The International
Child Resource Institute in Nairobi, Kenya, completed some of the
background research, but the 19 members of the circle did plenty of
reconnaissance on the ground.

They interviewed the program
leaders and talked with many of the people receiving services. They also
investigated conditions at the charities, which helped them spot larger
needs or areas where the charity might have been looking for a quick
fix.

Ms. Diamond says the group made
better decisions about giving because it was able to draw on the
knowledge and input of so many people. "It was very, very thorough," Ms.
Diamond says. "We never stopped talking about it."

The Charitable Foundation ScamDonors get those perks because they agree to relinquish
control over the money. But since they appoint the organization's board, they
can retain a great deal of influence over it. Regulators and lawmakers suspect
that many wealthy people have used these organizations more for tax planning
than for any charitable aim and are pushing for tighter rules as part of a
broader crackdown on charitable tax exemptions. "I'm deeply disturbed that with
a good number of supporting organizations, people are taking multimillion-dollar
tax deductions for what they claim are contributions to charity, yet too often
the result is a thimbleful of benefit to charity," said Senator Charles E.
Grassley, the Iowa Republican who is chairman of the Senate Finance Committee.
Stephanie Strom, "A Tax Benefit for Big Donors Often Bypasses Idea of Charity,"
The New York Times, April 25, 2005 ---
http://www.nytimes.com/2005/04/25/business/25taxes.html?

This comes as no surprise: Charity has
always afforded scam opportunitiesThe tax laws
allow favorable treatment for donations to charity and for institutions
ostensibly dedicated to good works. But for every tax break that's legal,
there's a scheme to stretch it too far. Abuse in the charitable world is on the
rise, IRS Commissioner Mark Everson told the Senate last week. Charitable scams
account for part of the billions lost each year in fraudulent deductions, though
the IRS can't say exactly how much. The Senate Finance Committee is looking into
the abuses, which include people who take inflated deductions for dubious gifts
and foundations that squander money on lavish salaries. In either case, the
federal treasury is cheated, and other taxpayers must make up the losses. Such
charitable scamming turns tax laws on their head: Deductions meant to encourage
public good works are being hijacked by cheaters for their own benefit. Leaders
in the non-profit world should be the toughest on these scams, which at times
have soured the public on giving. Instead, they've acted only after Congress
pushed them and have called for only milquetoast reforms.
"As charitable cheating rises, so does cost to taxpayers Non-profits fail to
enact tough reforms to root out growing scams," USA Today, April 11,
2005, Page 12A ---
http://www.usatoday.com/printedition/news/20050411/edit11.art.htm

Profiteers
Heading Legitimate CharitiesCharity executives haul home the lion's share striking
disparity between what nonprofit fat cats make and industry norms — hundreds
of thousands of dollars in many cases — illustrates a troubling lack of city
oversight, officials say. A whopping 200 executives at organizations that
provide services for the city's have-nots take home in excess of $150,000 a
year. That's more than the salaries of City Council members, the public advocate
and all the city's district attorneys. Another 12 nonprofiteers make more
than the top nonprofit earners in the entire state based on the budget size of
their groups, according to a survey of 2002 salaries by the nonprofit watchdog
Guidestar.org.
"$WEET CHARITY FOR EXECS AT NONPROFITS," New York Post, March
13, 2005 --- http://www.nypost.com/news/regionalnews/42413.htm

Possible
new assurance service clients for CPA firmsA number of major international charities are opening
their doors for the first time to outside inspectors, allowing them to certify
that donations are spent as advertised. The charities say they hope
thorough inspections and a new industry seal of approval will assuage public
fears of donations being misused. The nonprofits are also trying to keep ahead
of a movement in Congress to impose regulations on the fast-growing but largely
unsupervised world of nongovernmental organizations.
Michael M. Phillips, "Big Charities Pursue Certification To Quell Fears of
Funding Abuses," The Wall Street Journal, March 9, 2005; Page A1 ---
http://online.wsj.com/article/0,,SB111033202546074217,00.html?mod=todays_us_page_one

A key fund-raiser for Harvard University used his connection to the school to
defraud benefactors out of millions of dollars, showing how sophisticated
professional investors can be just as vulnerable as amateurs.

Both had children at Harvard College
and they knew each other as donors to the Harvard Parents Fund, which Mr.
Earls headed for a time with billionaire Robert Bass. Mr. Earls was a deal
maker with a penchant for high-risk investments; Ms. Fleiss was a hedge-fund
manager.

So when he asked her to invest in one
of his companies in 1998 -- and intimated that Mr. Bass might, too -- she
opened her hedge fund's checkbook, eventually putting almost $1.8 million into
the venture.

"He had a Southern accent and a
big smile, and he would say, 'Karen, I have a deal for you,' " she
recalls. "By the time he was finished, it sounded like the deal of a
lifetime."

It wasn't. When she cashed out, all she
had to show for her investment was $50,000. Ms. Fleiss was one of three
wealthy Harvard parents and alumni who recently testified about being bilked
by Mr. Earls. The authorities say he stole much of the money they invested
with him, siphoning off cash as he passed it through another company he
controlled. In the ledgers, the skimmed funds were camouflaged as legal,
management or accounting fees.

All told, prosecutors say, Mr. Earls
defrauded more than 100 investors of $13.8 million. They say Mr. Earls
diverted $1.2 million to an education trust fund for his own children, and
$4.3 million more to other personal accounts.

The Harvard connection and other
fund-raising activities gave Mr. Earls "access to a pool of potential
investors who were very wealthy, and he knew how to talk those people into
investing with him," prosecutor William Stellmach said at the trial.

In April, Mr. Earls was convicted of 22
counts of fraud in Manhattan federal court after one investor took his
suspicions to prosecutors. In court, Mr. Earls acknowledged moving investors'
money to various accounts he controlled -- which he attributed to "sloppy
business practices" -- but denied stealing.

His lawyer, Barry Coburn, said in court
that Mr. Earls couldn't have had criminal intent to steal because he kept
records of the amounts diverted. The investors "lost their money because
the Internet bubble expanded and expanded and popped," Mr. Coburn argued.
They didn't have "some kind of money-back guarantee."

Mr. Coburn says his client declines to
comment on the details of his case. "Mr. Earls has been convicted by a
jury," Mr. Coburn says. "It would not be appropriate in my view for
us to respond to particular factual allegations in this context given that Mr.
Earls is facing sentencing."

As described by prosecutors, Mr.
Earls's scam appears to be a variation of "affinity fraud," in which
victims are lulled into dropping their guard by mutual ties to the same
religious organization or ethnic group. Mr. Earls cultivated important
contacts through his work for the Harvard Parents Fund and the Boys &
Girls Clubs of Greater Washington, D.C. -- and used data supplied by Harvard
to assess likely investors.

The case shows that sophisticated
professional investors can be just as vulnerable as amateurs. Much of the
money Mr. Earls stole came from a handful of wealthy Harvard benefactors,
including a former aide to junk-bond impresario Michael Milken. Even Harvard
found itself short-changed. Mr. Earls reneged on three separate pledges
totaling $275,000 that he made while he headed the parents fund, a school
official testified at his trial.

Mr. Earls, 59 years old, grew up in
Bluefield, W.Va., and attended the University of Virginia. In the 1970s, after
stints as a gym teacher, mutual-fund salesman and stockbroker, he recruited
others to invest with him in projects including movies, theaters, apartments
and microwave-oven retailers. The 1980s saw him organizing investment groups
that bought stakes in numerous enterprises.

In the mid-1990s, Harvard's development
office took notice of Mr. Earls as a potentially productive fund-raiser for
the Harvard Parents Fund. He was a big donor to the school, and three of his
four children eventually enrolled there. His lawyer says in an interview that
recruiting investors wasn't the principal motive for his unpaid volunteer
work.

Harvard fund-raising officials are
angry about what happened. "The fact that someone would volunteer their
time for a nonprofit and then use that opportunity to line their own pockets
is an outrage," says Andrew Tiedemann, communications director for alumni
affairs and development at Harvard. "We have never seen anything remotely
like this in Harvard history."

One of Mr. Earls's most important
fund-raising assignments was Robert Bass, one of the well-known Bass brothers
from Texas, who had made numerous high-profile investments in the 1980s. The
two men met in connection with Harvard Parents Fund activities, and Mr. Bass's
daughter Chandler, who entered Harvard in 1996, became "good
friends" with Mr. Earls's daughter Kate, Mr. Bass testified.

With the District's approval, he gave himself an
$82,000 salary and paid his brother $8,000 as a consultant. He spent $25,000
for signature artwork and a matching stainless steel table. He bought $6,000
chairs, a new blue sport-utility vehicle and a silver van, personalized with
vanity tags. He spent $143 to settle debts at a florist and rush a "Happy
Birthday" bouquet to the D.C. Council member who approved his grants. He
billed taxpayers for it all.

Over seven years, District officials sank nearly
$5.4 million into his projects. Three city agencies gave him multiple
contracts, and four others had a role in making sure he was paid.

But when Prioleau's foundation collapsed last year,
the city's investment evaporated. Most of the furnishings had been sold at
public auction after languishing in a warehouse for almost two years. About
$195,000 worth of equipment was sold for slightly less than $9,000, just to
pay a storage bill. Prioleau closed his training center.

Prioleau defended his work in interviews over the
course of a year and reported to the D.C. government that his center had
trained thousands of disadvantaged people. But city officials say there are
no records to verify that number.

The story of Archie Prioleau and his dealings with
the District is one of broader failings -- the propensity across city
agencies to violate their policies as they dispense public funds with little
attention to how the money is spent.

Continued in article

Corruption is chronic in labor unions

Labor officials doing personal things at an increasing rateBut Mr. Yud said that if the department
(Department of Labor) had been doing audits as
vigorously as in decades past, it might have prevented corruption like the
embezzlement of more than $2.5 million by leaders of the Washington Teachers
Union. Among the items bought with the stolen union money were a $57,000 Tiffany
tea service for 24, a $13,000 plasma television and a $20,000 custom-tailored
mink coat. There were also the 277 checks totaling $41,309 that the secretary of
an autoworkers' local wrote to herself over two and a half years, and the dues
money stolen by the office secretary of a Minnesota plumbers' local, who, in
ultimately pleading guilty, agreed to repay $54,469. Since 2001, department
officials say, more than 500 union officials have been indicted on charges
including fraud and embezzlement.
Steven Greenhouse, "Labor Dept. Plans Increasing Scrutiny of Union Finances,"
The New York Times, April 17, 2005 ---
http://snipurl.com/NYTlabor

This month marks the deadline for the last of the
nation's unions to file newly expanded disclosure reports, known as LM-2
forms. LM-2s have been around a long time, though until Labor Secretary
Elaine Chao issued a rule requiring an expanded form in 2004, unions got
away with providing the skimpiest details. This proved useful to union
bosses who wanted to mask their political spending, or in some cases their
corruption.

They are now being dragged into the sunshine.
Whereas unions used to lump millions of dollars of disbursements into such
vague categories as "sundry expenses," the new regime requires them to
provide a detailed breakdown of who or what received union money: issue
advocacy groups, political consultants, polling outfits, even hotels at
which their members stayed.

Hard-working union members deserve to know, for
example, that of the AFL-CIO's $82 million in discretionary disbursements
from July 2004 to June 2005, only 36% went to representing members in labor
negotiations -- which is what unions were created to do. A whopping $49
million, or 60% of its budget, instead went to political activities and
lobbying, while another $2.4 million went to contributions, gifts and
grants. The National Education Association was even more skewed toward
politics, spending only 33% of its $143 million discretionary budget on
improving its members' lots.

By our calculations based on the filings, the
AFL-CIO spent at least $2.7 million alone on T-shirts, flyers, telephone
calls, Web site hosting, and other support for 2004 Presidential candidate
John Kerry. Groups that received AFL-CIO money included Citizens for Tax
Justice, an organization devoted to higher tax rates; the Economic Policy
Institute, a think-tank that campaigns against Social Security privatization
and tax cuts; and the Alliance for Justice, a ferocious opponent of
President Bush's Supreme Court nominees.

Dues-paying workers of the world might want to ask:
Why is Mr. Sweeney spending more of their money trying to raise taxes, or
fighting for the cultural left, than he is on collective bargaining?

The IRS may also want to inspect these forms.
That's because, prior to the new LM-2 disclosure rules, at least a dozen
large unions had told the tax agency that they spent nothing on politics.
The National Education Association's 2004 tax return, for instance, left
blank the line for "direct or indirect political expenditures." Yet
according to its LM-2, the NEA spent $25 million on such activities from
September 2004 to August 2005. Eliot Spitzer could sure have fun with that
one -- if he didn't have the NEA's endorsement.

The forms also offer a glimpse at union chief
salaries. At least three union heads took home more than a million dollars
in compensation in their last fiscal year -- though two were admittedly the
heads of the NFL and NBA players unions. The third-fattest union cat was
Martin Maddaloni, the chief of the Plumbers and Pipefitters, who took home
$1.3 million last year. The Plumbers' "director of training" -- a fellow
named George Bliss -- somehow managed to make $456,644 in 2005. Now we know
why plumbers are so expensive: They have to make enough to pay the dues that
keep their union reps in Armani.

The LM-2 forms show that some 1,015 paid union
officers and employees devoted more than 90% of their time to political
activities. Combined, these folks took home compensation worth nearly $53
million. Some 1,755 union personnel spent at least 50% of their time on
political activities and lobbying.

As for financial management, let's just say some of
these union chiefs are having fun in their jobs. United Auto Workers Local
14 reported it spent $67,000 at an amusement park. The International
Brotherhood of Electrical Workers spent $124,000 at a hotel resort. And the
Plumbers forked over $225,000 on Nascar advertising.

A couple of other fun facts: Of the 100 highest
paid union executives, 93% are men. We hope some class-action lawyer isn't
looking to sue for gender discrimination. And, believe it or not, unions
report that they spent $624,000 at largely non-unionized big box retailers
across the country, including Target, Wal-Mart, Sam's Club, Costco and
K-Mart. They apparently know a low price when they see one. * * *

When Secretary Chao proposed the new rules, unions
were furious and came close to getting them blocked on Capitol Hill, and in
court. Mr. Sweeney, the AFL-CIO chief, was quoted as saying the rule "will
cost union members an estimated billion dollars a year," and that the
average union would have to spend $1.2 million. The actual cost of AFL-CIO
compliance turned out to be $54,000, so Mr. Sweeney was only off by 96%.

Unions should have the right to spend whatever they
want on politics, and we've defended that right against McCain-Feingold and
other campaign-finance limits. At the same time, however, union members who
don't like the way their coerced dues are spent have the right under the
Supreme Court's Beck decision to ask for the political and grant portion of
that money back. May these illuminating LM-2 disclosures be spread far and
wide.

"5 Reasons I Hope Classmates.com Gets Sued
Into Oblivion: It's time for Classmates.com to change or close up
shop. A lawsuit against the company might just prompt some movement" by JR
Raphael, PC World via The Washington Post, November 13, 2008 ---
Click Here

Have you
heard? Someone's
suing Classmates.comover those
e-mails it's been blasting the world with for the past decade.
My reaction? It's about damned time.

Here's the
scoop: A man from San Diego says he received e-mails from
Classmates.com claiming his former classmates were
"trying to contact him"through the
site. (Surely you've received one or 100 of those, too -- I know
I have.) Our guy joined the service, paying for a premium
membership ($15 for 3 months) to gain access. Then, he said, he
discovered that no old friends had attempted to get in touch or
even looked up his name.

"Of those
www.classmates.com users who were characterized ... as members
who viewed Plaintiff's profile, none were former classmates of
Plaintiff or persons familiar with or known to Plaintiff for
that matter," the lawsuit says.

The suit claims
Classmates.com has pulled similar tricks on countless other
unsuspecting users. It demands the company refund subscriptions
fees and pay an additional fine for deceptive advertising.

I, for one, hope
the suit is a massive success. Why, you might ask? Allow me to
explain.

How happy are
people who get Classmates.com e-mails? A quick glance at the
Consumer Affairs complaints page for the company will give you
an idea. I found dozens of complaints from the past month alone.
The BBB gives Classmates a C+ rating. The reason for the rating
is "number of complaints filed."

"I have called
them several times to stop sending me junk e-mail, and they keep
telling me to unsubscribe, which I have done 10 times," writes
Jeff from Michigan.

"I have tried
many times to have them remove my name from their mailing list
and they do not acknowledge my request," notes Skip from
Arizona.

Look through the
consumer complaints on ConsumerAffairs.com and see just how many
people say they're being billed without authorization. Many
users say they gave a credit card number for a trial and kept
getting charged long after the trial's end, despite numerous
cancellations. Many users also say they can't even login to the
site, and no one will answer their requests for help.

When I tried
Classmates.com I couldn?t even look at my high school class list
(or any other class) without first giving my personal
information, including e-mail address. See a connection here?

I can see
how Classmates.com might have been appealing back in 1995, when
it first launched. But nowadays, you can find better and easier
ways to connect with old classmates -- ones that are both cost-
and spam-free. (Facebook, anyone? MySpace?) The company's
audacity in continuing to lure curious people into paying money
to find out what "mysterious person" is interested in them just
floors me.

Congratulations,
you won the lottery in a country whose name you can't even
pronounce! A wealthy oil executive in a far-off land wants to
give you millions of dollars, right now! Sexy girls want to meet
you!

Now let's be
honest. If someone came to your door and told you any of those
things, you'd tell him to get lost. So why do people still fall
for this stuff when it's in their e-mail, as if a poorly written
message made a weird-sounding pitch any more legitimate?

The saddest part
is, the only reason annoying e-mail keeps filing your inbox is
because it works. No matter the number of reports detailing
e-mail hoaxes gone bad and tales of spammers taking people for
all they're worth, people just keep on clicking.

Why? It's
the law of percentages. The response rate for snail-mail spam is
between 0.5 and 1 percent. That might not sound like a lot, but
if you apply it to e-mail, it means a spammer can send 1 million
messages--without the cost of paper and postage--and 5000 to
10,000 people will answer. In fact, a study out this month
indicates that nearly 30 percent of Internet users
confessed to purchasing something from spam e-mail.

In 100 years,
the spam boxes on our brain-implant chips will be maxed out, and
we'll still be asking: Who's clicking on this stuff?

Here's PC
World's list, in no particular order, of the top e-mail hoaxes
that have come through inboxes and fooled millions.

It's
amazing
how many people were willing to believe this e-mailabout a breeder in New York who raised
kittens in bottles. Perhaps it's the horrible detail that
outraged the recipients so much: The small animals are given a
muscle relaxant to pacify them and to allow the breeder to get
them in the bottle. They're fed through straws. Their skeletons
take on the shape of the bottle. "Latest trends In New York,
China, Indonesia and New Zealand." A bizarre case of animal
cruelty? A sick joke?

Actually,
it started as a fake Web site,
Bonsai Kitten, the product of MIT students.
The idea was so outrageous, it spread like
wildfire via e-mail. Plenty of people fell for it, many begging
animal-welfare organizations to help the small furry creatures.
Even
the FBI investigated. Perhaps it could
happen--after all, you can miniaturize a tree
by pruning it and shaping it. But cats? Last time we checked,
it's more or less impossible (not to mention probably illegal)
to stop an animal from growing simply by keeping it in a small
container.

E-mail alerts
outlining the dangers of dihydrogen monoxide swept the Internet
in the late 1990s and still pop up today. Many ask that you sign
and forward a petition to ban the chemical, which contributes to
global warming, is a major ingredient in acid rain, causes
metals to rust more quickly, and has been found in cancerous
tumors. The chemical also contributes to the greenhouse effect
and to erosion of our natural landscapes. It's even in food.
Sounds pretty dangerous. You're ready to sign right now, aren't
you?

Well, let
us tell you one more thing about dihydrogen monoxide: It's more
commonly known as water. You know, the substance that every
single living being relies on to survive? The origins of this
item are multifold, from flyers circulated at the University of
California at Santa Cruz in 1989 (so 20th century!) to a junior
high school student who surveyed 50 classmates in 1997 and got
43 of them to sign his petition to ban the chemical. He then
won a prize at his science fair
for his project, called "How Gullible Are We?" Several Web pages
touting the chemical's dangers are still live.
Don't feel too bad if you've ever fallen victim to this hoax;
even a government official in New Zealand
took the bait last year.

With all
the talk of
cell phone dangers, the idea of
radiation from them being
powerful enough to pop popcorndoesn't
seem that far-fetched, at least on the surface. Why, just this
summer the Pittsburgh Cancer Institute
advised its employees to limit exposureto electromagnetic radiation from cell
phones. So why wouldn't you believe the swarm of e-mail telling
you to look at the incredible video of friends popping kernels
of corn with their mobile phones?

The group
allegedly did it by placing the kernels inside a ring of cell
phones that then rang at the same time. The result: The kernels
popped wildly as the cell phone owners shrieked in delight. It
must be true--it was on the Internet, and the video was fun to
watch. The event set off a wave of imitators attempting to film
themselves re-creating it or trying to disprove it. The best of
these, in our opinion, was the video where the people
replaced their cell phones with Barack Obama dolls and
the popcorn popped anyhow. Watch out, Senator McCain!

Unfortunately, as you might expect, it was all fake. A company
called
Cardo Systemsmade the video to
promote its cell phone headsets. Abraham Glezerman, Cardo's CEO,
told CNN that the phones were real and
the popping popcorn was real, but the video was a composite,
with the footage of the popcorn heated over a kitchen stove
digitally dropped into the video of the folks with their phones.
Dang. Guess the
e-mail about cell phones that can cook eggsisn't accurate either.

Bill Gates Wants
to Give You Money

This summer an
editor at PC World received a note from a relative asking if the
e-mail she had received that told her Bill Gates wanted to send
her $1000 was real. Uh, no...

Although
Gates is being very generous with his fortune now that he has
retired from day-to-day work with Microsoft,
you can get some of it only by applying to the
Bill and Melinda Gates Foundation. But
long before the foundation was created, back in the early days
of the Internet, e-mail discussing Gates's or Microsoft's
willingness to fork over free cash was widely circulated--and
clearly, it's
still forwarded today. Snopes.com has
a list of the urban legends circulating most widely and,
despite the fact that Gates and Microsoft have been the subject
of phony e-mail alerts and hoaxes since the 1990s, they are
still in the top 25 this month.

One version says
that Microsoft wants to make sure Internet Explorer remains the
dominant browser (which we're sure is true). All you need to do
to help out and get money from Microsoft is to forward an e-mail
to your friends. Microsoft will track the e-mail for two weeks,
and you get paid for every person who receives the e-mail
through you. Among the attractive details is a list of differing
amounts that will come to you depending on how many referrals
you make--one version of the scam says the sender received a
check for $24,800 from Microsoft. Not chump change!

Hold on a
second. First, if tracking an e-mail like that were even
possible, theElectronic
Frontier Foundationwould be all over
that faster than you can say "invasion of privacy." Oh, and did
we mention that the technology to do such a thing probably
doesn't exist? Of course, since you read PC World, you know that
already. But if Microsoft ever really wanted to pay us just for
forwarding an e-mail, we're game.

In 2002,
Symantec supposedly issued an advisory about certain e-mail
messages flying around the country about an "important virus to
look out for." The antivirus-software maker, which does issue
warnings on real viruses, allegedly instructed Internet users
not to open any e-mail with the subject line "LAUNCH NUCLEAR
STRIKE NOW." If you did open that e-mail, you would
inadvertently end up sending nuclear warheads winging their way
toward the former Soviet Union. That's right, you could start
your very own nuclear war while in your slippers and bathrobe.

The deal
was that opening the e-mail would download a virus that would
tell your PC to access NORAD computers in Colorado and instruct
them to launch a full-scale attack on Russia and former U.S.S.R.
states. Okay, maybe Secretary of State Condoleezza Rice
may be thinking that way right now over
the current crisis in Georgia, but
let's leave that to the professionals, shall we?

Needless to say,
the virus isn't real, Symantec didn't issue such a caution, and
it should be painfully obvious that this one is a hoax. If that
isn't clear to you, step away from your PC and don't ever touch
it again.

Let us
guess: At one time or another, you've received an e-mail from an
earnest resident of Nigeriathat
starts with a hello and an introduction to the sender. The
e-mail then suggests that your help is needed to claim an
abandoned sum of money in a foreign account, or something
similar. The message typically promises that you will receive a
large amount of money if you simply send a smaller amount of
money now.

You didn't
fall for it, did you? These convincing missives, which may or
may not be from Nigeria, are known as 419 scams (named after a
section of the Nigerian criminal code that deals with fraud).
Wikipedia says most of them are
advance-fee frauds or confidence tricks.
Not only will you not get rich, but you'll
also have a very hard time getting back any money you wire the
sender up front. We're sorry to report that these types of
scams, which are based on versions dating back to the early
1900s, are still popular--variants purporting to be from Russia,
Spain, Nigeria, and many other countries still pour in to e-mail
accounts around the world.

Simson
Garfinkel takes a look at
authority and sourcing in Wikipedia worldwith an article in the latest edition of
Technology Review. He focuses on Wikipedia’s requirement
to cite published sources in adding information to Wikipedia
articles. Yes, with a mob-written encyclopedia, a requirement
for citing published, vetted sources makes sense, he writes.

“But there is a
problem with appealing to the authority of other people’s
written words: Many publications don’t do any fact checking at
all, and many of those that do simply call up the subject of the
article and ask if the writer got the facts wrong or right,” Mr.
Garfinkel writes. “For instance, Dun and Bradstreet gets the
information for its small-business information reports in part
by asking those very same small businesses to fill out
questionnaires about themselves.”

This policy is
particularly problematic if you are the authority on a
particular topic, but you can’t use your own base of knowledge.
Jaron Lanier, a futurist, had problems changing a statement on
the Wikipedia entry about himself that said he was a filmmaker.
He wasn’t a filmmaker, yet every time he removed that non-fact,
someone put it back in.

He finally
got the item changed, but was then criticized for editing his
own wikientry. (PR directors who maintain their college
Wikipedia pages, take note.)

Comments

Doesn’t the problem of
unreliability of other sources apply to any
secondary or tertiary work? ;) (…and on that note, I suggest
reading the Wikipedia page
Wikipedia:Reliable sources …)

"Online User Reviews: Can They Be
Trusted? They're all over the Web. Everybody reads them. But are
reader reviews reliable enough to depend on when it comes to
spending your cold, hard cash?" by Robert Luhn, PC World via
The Washington Post, October 23, 2008 ---
Click Here

Anyone can write
a product review, and everybody reads them. But can you trust
them? I refer, of course, to reader or user reviews, the kind
you find on Amazon, Buy.com, Epinions, PC World, Yelp, and even
the sites of tech product manufacturers, such as Dell. They're
everywhere.

But it's the
fraudulent reviews--positive reviews contributed by "readers"
paid by the company being evaluated--that worry critics and
advocates alike.

In an October
2007 poll conducted by the PR firm Burson-Marsteller, 1000 savvy
Web consumers (dubbed "e-fluentials" by some wordsmith who
evidently was unfamiliar with the term " effluent") were clearly
convinced that fake reviews are endemic--and could result in a
backlash from online consumers.

The numbers tell
the tale: 48% (up from 39% in 2001) believe that fake reviews
are being planted on consumer sites. 57% say they won't buy a
product if the reader reviews seem suspect. And a whopping 76%
claim to double-check what they read online. All are signs of a
healthy skepticism.

WebWatch--whose
motto is "Look Before You Click"-- says on its site that its
credibility campaign has led more than 170 sites, including CNN,
CNet, The New York Times, Travelocity, and Orbitz to agree to
uphold WebWatch's credibility guidelines.

Barbara Kasser,
author of Online Shopping Directory For Dummies and Internet
Shopping Yellow Pages, says: "There's no way to check the
reviewer's veracity or if they're on the take--they're
anonymous." Another concern: the reviewer might not be
competent. "How did [the reviewer] use the product? Did they use
it properly? Did they follow the manufacturer's directions?
There's no way to know," she points out.

Why So Enticing?

Many ordinary
people consider reviews written by consumers to be more
reliable, more critical, and ultimately, more useful than many
other sources of information. At least that's what they told The
Nielsen Company in a survey conducted in April 2007. The top
three most trusted sources: "Recommendations from consumers"
(78%), "Newspapers" (63%), and "Consumer opinions posted online"
(61%). (In a story that PC World posted in 2003, we generally
agreed with the above perceptions--but we're a bit more cynical
now.)

Certainly,
reader reviews have come a long way since the era of Usenet and
reader forums. Depending on the site and its readers, you may
find pithy commentary, long-winded rants, numeric ratings, pros
and cons, graphs, and even reviewer videos.

But Mitch
Meyerson, author of the book Guerilla Marketing on the Internet,
thinks that "influenced" reviews (paid for or not) are pretty
common. For example, says Meyerson, "authors often enlist
friends, colleagues, and clients to review their books on
Amazon."

According to
Blogging Tips founder and Web developer Kevin Muldoon, "tech
sites usually have fair, accurate [reader] reviews...but there
are definitely more fake reviews [on sites] covering cosmetics
and hotels." Read Muldoon's blog entry on his own guidelines for
how he reviews products.

The following is a combination of
parts of two November 14, 2008 messages from David Fordham, James
Madison University
[fordhadr@JMU.EDU]

For many years,
I've included a link to the dihydrogen monoxide warning site
from my own bookmarks page, showing it as the only activist
group I affiliate with. Every semester I recommend my students
visit it. Everything reported on that website is entirely true
and factual, probably more factual than a lot of what I read in
the Post and WSJ. And guess what! My students report that they
actually DO LEARN A LOT from visiting that site, and it helps
them immensely in their daily life as a modern citizen.

Before they
visit the site, I inform my students of the fact that the
federal government (U.S. Army, actually) maintains several
massive storage facilities containing millions of gallons of
this chemical in the mountains above our valley, in what most
people assume is a civilian area called the George Washington
National Forest. If if those storage facilities were to
experience failure and suddenly release all that stuff, you can
rest assured there would be millions of dollars of damages, and
probably some deaths, too. My students do the research, check it
out, and learn that what I'm saying is entirely true.

Of course,
that's NOT the main thing they learn from the coalition's
website, however. No, they learn something far more important.

The site is one
of the most well done educational sites of its genre I've seen.
It is intended to help people stop and think, and to remind them
that they are too often willing to accept nonsense from the net.
And from other sources, too.

It's not a scam
and shouldn't be included with them. A scam is defined as a
"confidence-based scheme intended to defraud". I'm unaware of
any defrauding or even any attempt to defraud. The site doesn't
ask for donations, tell you to send money, pay dues, or even ask
you to write your Congressman. Sure, they sell t-shirts
promoting their organization, but so does Stanford, so does
Harvard, and so does Trinity.

Check it out.
You won't get a virus, and you might realize how much benefit
today's college students can get from learning what the site
wants you to learn.

The main reason
I like the DHMO site is that it brings attention to the common
journalism practice today of giving sensationalized,
fear-mongering, emotionally-charged, possibly factual but
unquestionably one-sided, abridged, carefully selected, and
positively misleading wording masquerading as "news". As I am
wont to point out, there are some national daily publications
which make this practice their bread and butter. The DHMO site
makes it clear that unless someone already knows a lot about
what is being reported, they have to rely on the presence of the
dire, emotional, wording, and the presence of an "unmistakable
conclusion any idiot can reach from this article" as the hints
that let them recognize the stuff as pure drivel. I hate to see
supposedly-intelligent people get taken in by this biased
half-truth selective reporting regardless of whether it is
delivered via a website, an email, an NPR feature story, or on
the front page of the Wall Street Journal.

David Fordham

Beware of those bargain deals that companies
offerFrom hotels to cell phone bills, companies attach a
barrage of hidden, extra charges. One reason is the Internet. Online shopping
permits consumers to comparison shop for bargains. So companies are countering
low prices with hefty fees. So if a $99 room is snagged at a nice hotel via
Priceline.com, then the hotel tends to attach a "resort fee" for towels at the
pool or removing something from the mini-bar – even it put back 60 seconds
later. Bob Sullivan, author of Gotcha Capitalism, talks with Steve Inskeep about
deceptive fees and why U.S. businesses are so dependent on them.
"Companies Use Fees to Counter Bargains," NPR, January 18, 2008 ---
http://www.npr.org/templates/story/story.php?storyId=18212223

New
fraud-prevention technology has made credit card crime more
difficult in the U.K., but it is increasing in other countries
that have not adopted "chip-and-pin" safeguards. Chip-and-pin
credit cards are cards containing electronic chips that contain
the information otherwise found on magnetic strips. According to
the Association of Payment Clearing Services (APACS), the U.K.
clearing service, credit card crime in the U.K. dropped 4
percent in the first half of this year, compared with the

first six months
of 2006. However, fraud on UK-issued cards, primarily in the
U.S., rose 126 percent during that time. Chip-and-pin is not
accepted universally, so cardholders' names and account numbers,
expiration dates, and security codes are still stored on the
magnetic strip of a credit or debit card, as well as on the
microchip.

Criminals are
copying the data on the strip to create a fake card that is then
used in a country that has yet to upgrade to chip-and-pin
technology, the BBC reported. All European Union members plan to
upgrade by 2010.

Fraud patterns
are changing. Last year, losses suffered by retailers, credit
card users and financial institutions fell by 3 percent. But
this year the numbers are rising due to the surge of cloned
cards in the U.S. and elsewhere, along with a 44 percent
increase in online and telephone fraud for the first half of
this year, reported.

The good news in
the U.K. is that online banking fraud is down, thanks to
chip-and-pin and other security measures, as are losses from
stolen cards being used to withdraw money from cash machines,
which is down by 57 percent. When it comes to transactions where
the cardholder is present, fraud has fallen 11 percent,
FinanceWeek reported.

U.S. companies
are boosting spending on credit card security, however, under
the threat of fines. According to The Wall Street Journal, rules
called the Payment Card Industry's Data Security Standards
discourage encoding customer information on the magnetic strips.
The rules call for ways to encrypt information to make it
unreadable to hackers and methods to control employee access to
sensitive information. The rules are not new, but Visa has
announced it would start levying fines of up to $25,000 a month
to large merchants who aren't following the rules.

Forrester
Research says that the biggest merchants in the U.S. are
forecast to spend $400 million to $500 million this year on
technology to meet the security standards.

Another
technology is making its way into circulation in the U.K.: a
bank card that allows shoppers to pay for inexpensive items
without using a PIN or signature, The Times of London reported.
These so-called contactless cards will be issued in London over
the next couple of months. APACS estimates 5 million will be
issued by the end of next year.

Contactless
payment cards use short-range radio to exchange payment
information with the register for items less than £10. Shoppers
merely tap their debit or credit cards on a reader. A PIN will
still be needed for more expensive items.

Robert Kenly of
moneysupermarket.com, a price comparison site, told the Times:
"There will be a number of checks in place and so long as
cardholders remember to report lost cards immediately, they will
always have any losses refunded. For some people it will perhaps
seem too risky but, as with anything new, once people have tried
it they may find that they actually like it."

Banks in the
U.S. have been issuing contactless cards since 2003, with more
than 10 million now accepted by 30,000 shops and restaurants,
the Times reported.

The World Wide Web is a
marvelous thing. Because it exists, more people have direct
access to more knowledge than at any time in history. But, by
linking people everywhere, the Web has also spawned a new
international criminal class, and a related class of sleazy
businesses.

These creeps now find it
easier than ever to defraud people, steal their identities and
blast them with unwanted or false advertising. They use the Web
as a pathway to infect computers, corrupt data and take over
others' machines.

Security software can
help block this wave of woe. But it would be better to know in
advance if a Web site that comes up in a search result, or one
you arrived at through other means, is harboring malicious
software, or perpetrating scams, or generating spam and unwanted
pop-ups. It might also be nice to know if a site with an
innocuous name contains pornography, hate speech or other
content that might be offensive to you.

I've been testing two
services that aim to provide such advance notice of bad or
offensive sites. The services, Scandoo and SiteAdvisor, take
different approaches to the task and offer different features.
But both instantly mark up a search-result page, and label the
links that might be dangerous.

Both services are free of
charge, and each works on both Windows and Macintosh computers,
and in multiple Web browsers. On balance, I prefer SiteAdvisor,
though Scandoo has a couple of things SiteAdvisor lacks.

Scandoo, still in beta,
or test, phase, is from a company called ScanSafe, which
provides site-scanning and security services for corporations.
SiteAdvisor was founded by some engineers from MIT and was
recently bought by McAfee, the big computer-security firm.

SiteAdvisor works via a
software plug-in that you download and install. The plug-in,
available at
www.siteadvisor.com, modifies either
the Internet Explorer browser for Windows, or the Firefox
browser for Windows, Macintosh and Linux, so the browser can
identify bad Web sites. SiteAdvisor works with the Google, Yahoo
and MSN search engines.

Scandoo requires no
software downloads and works with more browsers than SiteAdvisor
does. But it requires you to enter a search term at its Web
page,
www.scandoo.com, rather than at the
home page or search box of your favorite search engine. It then
transfers to the search engine you choose and modifies the
results page to identify sites that may be troublesome. It now
works only with Google or MSN.

There are some other
major differences between the two. Scandoo scans Web pages on
the fly to look for bad stuff. SiteAdvisor matches Web sites
against a database it has compiled about content. Scandoo works
only on pure search results, not the ads alongside the results.
SiteAdvisor rates the results and the ads, which often are more
dangerous.

In addition, because it
is built into the browser, SiteAdvisor can rate any site you are
visiting, not just sites listed in search results. SiteAdvisor
places a small, unobtrusive icon in your browser. The icon is
green if you are on a Web page it considers safe and honest. It
turns red if it regards the site as dangerous.

Scandoo works only on
search results pages. But it has a function SiteAdvisor lacks.
It can rate pages for offensive content, while SiteAdvisor
focuses just on the presence of malicious software, or invasive
advertising techniques. Scandoo allows you to specify which
kinds of content you want flagged, including pornography, hate
speech and gambling.

SiteAdvisor also flags
sites it regards as perpetrating scams, like charging people for
software that actually is free. But in my tests, it ignored some
other scams, such as offers for pills that magically enlarge
body parts.

In my tests, SiteAdvisor
consistently flagged more Web sites as bad than Scandoo did.
When I searched for "Free iPods" in Google, Scandoo gave all the
regular search results a green check mark, meaning OK.
SiteAdvisor marked the first regular result in red and gave it
an "X," meaning trouble. It also marked most of the ads in red
and gave them "X's."

This is partly due to
different techniques they use. Scandoo claims its real-time
scanning can uncover bad sites SiteAdvisor might miss.
SiteAdvisor claims its database is more comprehensive.

Another reason for the
disparity is that SiteAdvisor isn't just looking for viruses or
spyware. It uses test computers to see if sites are likely to
generate what it calls "spammy" email or pop-up ads. If they do,
the sites get flagged.

Some might regard
SiteAdvisor's filters as too aggressive, but, unlike Scandoo, it
gives a detailed explanation for each rating. The explanations I
saw made sense. For the free iPods site SiteAdvisor flagged, it
explained: "After entering our e-mail address on this site, we
received 11 e-mails per week. They were very spammy." It even
showed some test emails.

Both services are very
helpful. You might want to use Scandoo if you're concerned about
offensive content. But for flagging malicious software and
invasive advertising, SiteAdvisor is more comprehensive and
tougher.

Stay Clear of Foreign LotteriesThey say you can't win if you don't play,
but when it comes to foreign lotteries, you'll definitely lose.
Americans lose tens of millions of dollars this way each year.
Elizabeth Leamy, "Don't Get Fooled by Foreign Lotteries," ABC
News, April 14, 2006 ---
http://abcnews.go.com/GMA/Business/story?id=1897591&page=1&gma=true

Dangers in Buying Gift Cards from Display RacksWell the crooks have found a way to rob you
of your gift card balance. If you buy Gift Cards from a display rack
that has various store cards you may become a victim of theft.
Crooks are now jotting down the card numbers in the store and then
wait a few days and call to see how much of a balance THEY have on
the card. Once they find the card is "activated", and then they go
online and start shopping. You may want to purchase your card from a
customer service person, where they do not have the Gift Cards
viewable to the public. Please share this with all your family and
friends...
Snopes ---
http://www.snopes.com/fraud/sales/giftcard.asp

Question
What can you do to prevent being taken on eBay?
(Word of Caution: Never open an email message that pretends to be from
Pay-Pal)

To which "Kate" replied: "That's true, indeed. I
just scammed you, sorry for that, it's nothing personal. ... It's what I do, and
it pays well." How did Smith get into this mess? The way any confidence-game
victim does - by letting an overabundance of trust overwhelm ordinary caution.
Jeffe Gelles, "Psssst ... wanna buy a wedding dress?" The News-Sentinel,
http://www.fortwayne.com/mld/newssentinel/living/13980893.htm

Two brothers have published a book of "true tales of
treachery, lies and fraud" from eBay. "Dawn of the eBay Deadbeats" contains
stories written by eBay buyers and sellers. From stories of disappointing
purchases to out-and-out fraud, the book is a manual of what can go wrong when
buying and selling on auction sites. Brothers Stephen and Edward Klink co-wrote
the book, illustrated by Clay Butler. The idea for the book sprung from a
website Stephen Klink had created. A New Jersey police office, he founded
eBayersThatSuck.com - a site that aims to help people avoid auction scams -
after he himself was ripped off online.
Ina Steiner, "Dawn of the eBay Deadbeats: New Book Uncovers Online Auction
Treachery," AuctionBytes.com, December 28, 2005 ---
http://www.auctionbytes.com/cab/abn/y05/m12/i28/s01

Imagine buying vintage Spiderman
comics for $16,000 and receiving instead, a box of printer paper or
losing a whopping $27,000 in purchasing a big rig that didn't exist in
the first place. These are just many of the online auction fraud horror
stories that brothers Edward and Steve Klink compiled from their eBay
watchdog Web site eBayersThatSuck.com (E.T.S.).

In their book "Dawn of the eBay Deadbeats," some
70 strange-but-true stories were collected and retold with the help of
illustratorClay Butler.

The December 2005 publishing of the book comes just in time as the
online auction giant has been criticized by consumer groups, most
recently by the U.K. magazine "Computing Which?" for its passive and
sometimes delayed approach in handling fraud reports.

At any given time, the site has 78 million listings, and 6 million new
listings are added each day.

And while, eBay maintains that less than .01 percent of all listings end
in a confirmed case of fraud, that could mean that of the 1.9 billion
listings reported by eBay in 2005, that 190,000 cases were confirmed
frauds in the last year.

Currently there are almost 900 horror stories from eBay fraud victims
are on the E.T.S. site whose motto is "Winning the war on deadbeats."

And already the brothers are working on the next volume of horror
stories, encouraging victims who want to get their tales to be told to
get into contact with them.

United Press International spoke with Edward Klink about the recent
book, their watchdog
Web site, and the current state of eBay.

"We had collected hundreds of stories on the Web site
and figured it was time to take these stories to a wider audience and
let the victims have their say," Edward Klink said. "Plus with our
combined backgrounds, Steve is a police officer and I'm a business writer,
we felt we were ideally suited to get the job done."

Fraud on eBay can take on many forms including items paid for that vary
from the description in the sale, unpaid items, and spoof eBay or
Pay-Pal e-mails.

And like the many victims on their site, the brothers too have
encountered the problem of auction fraud.

In 2003, Steve, a New Jersey police officer, won a set of "new"
speakers, only to find that it looked as if they were "gnawed on by a
wild animal."

"The seller said they weren't that way when mailed, and eBay said there
was nothing they could do," Klink said. "Annoyed that he was stuck with
the merchandise and given no recourse, Steve started
www.ebayersthatsuck.com and stories began pouring in from around the
world."

And the site has received a positive response since it's been up and
running.

"People love it," Klink said. "On eBay, their official boards are
closely monitored and talk about problems and scams and eBay's failings
are not generally tolerated. So E.T.S. gives them an outlet. When it
first came out Ebayersthatsuck.com was featured on Courttv.com and
newspapers as far away as South Africa."

According to Klink, while eBay has what could be considered --"the
ultimate
business model" -- of collecting fees and
delegating the marketing, selling, packaging, shipping, and customer service
to eBay users, it's very easy for these same users to fall victim to
fraud.

"I think consumers let their guard down when they are sitting at home
and surfing the Web with their coffee," he said. "If a stranger offered
them a $1,400 antique vase on the street they'd most likely walk away,
but when that same vase is on
the Internetfor some reason the reaction is
more, 'Say, now that looks interesting.'"

And have the brothers seen any improvements in eBay's handling of the
fraud issue?

"eBay says it is a tiny fraction of all auctions," Klink said, "but the
hundreds of people who told us their stories hate being in that tiny
group and never thought they would be. Lots of fraud is underreported,
too. EBay encourages users to settle it among themselves, and if they
can't, then they are directed to pay $20.00 to have SquareTrade, a third
party, mediate the dispute. But it's not often a scammer shows up for
mediation!"

. . .

"We want people on eBay to have a good buying and
selling experience - transparent, well-lit, and safe," the spokesperson
said. "Fraud on all levels is something we take seriously."

The company also has a team dedicated to working
with law enforcement rather it be educating them on fraudulent cases and
working proactively taking information on specific cases to them or
cooperating with investigations.

"We would invite anyone to visit the site and read
more," said the spokesperson, who also emphasized that the no. 1 issue for
online shoppers is to pay safely using Pay-Pal or a credit card than any
other form of payment.

In many cases, consumers are able to get their
money back, Pay-Pal offers up to $1,000 back with buyer protection and
credit card programs usually have a pay back program in cases of fraud. In
many cases, Pay-Pal offers a way for consumers to make purchases without
providing personal information and at the same time protecting money.

"Dawn of the eBay Deadbeats" ($12.95) is
available on Amazon, eBay, and in select bookstores.

Fakes!The global counterfeit business is out of
control, targeting everything from computer chips to life-saving
medicines. It's so bad that even China may need to crack down
"Fakes," Business Week, February 7, 2005 --- http://snipurl.com/FakesJan_29

Martin Fleischmann put his faith in
online advertising. He used it to build his Atlanta company,
MostChoice.com, which offers consumers rate quotes and other
information on insurance and mortgages. Last year he paid Yahoo!
Inc. (YHOO )and Google Inc. (GOOG ) a total of $2 million in
advertising fees. The 40-year-old entrepreneur believed the
celebrated promise of Internet marketing: You pay only when
prospective customers click on your ads.

Now, Fleischmann's faith has been
shaken. Over the past three years, he has noticed a growing
number of puzzling clicks coming from such places as Botswana,
Mongolia, and Syria. This seemed strange, since MostChoice
steers customers to insurance and mortgage brokers only in the
U.S. Fleischmann, who has an economics degree from Yale
University and an MBA from Wharton, has used specially designed
software to discover that the MostChoice ads being clicked from
distant shores had appeared not on pages of Google or Yahoo but
on curious Web sites with names like insurance1472.com and
insurance060.com. He smelled a swindle, and he calculates it has
cost his business more than $100,000 since 2003.

Fleischmann is a victim of click fraud:
a dizzying collection of scams and deceptions that inflate
advertising bills for thousands of companies of all sizes. The
spreading scourge poses the single biggest threat to the
Internet's advertising gold mine and is the most nettlesome
question facing Google and Yahoo, whose digital empires depend
on all that gold.

The growing ranks of businesspeople
worried about click fraud typically have no complaint about
versions of their ads that appear on actual Google or Yahoo Web
pages, often next to search results. The trouble arises when the
Internet giants boost their profits by recycling ads to millions
of other sites, ranging from the familiar, such as cnn.com, to
dummy Web addresses like insurance1472.com, which display lists
of ads and little if anything else. When somebody clicks on
these recycled ads, marketers such as MostChoice get billed,
sometimes even if the clicks appear to come from Mongolia.
Google or Yahoo then share the revenue with a daisy chain of Web
site hosts and operators. A penny or so even trickles down to
the lowly clickers. That means Google and Yahoo at times
passively profit from click fraud and, in theory, have an
incentive to tolerate it. So do smaller search engines and
marketing networks that similarly recycle ads.

SLIPPING CONFIDENCE
Google and Yahoo say they filter out most questionable clicks
and either don't charge for them or reimburse advertisers that
have been wrongly billed. Determined to prevent a backlash, the
Internet ad titans say the extent of click chicanery has been
exaggerated, and they stress that they combat the problem
vigorously. "We think click fraud is a serious but manageable
issue," says John Slade, Yahoo's senior director for global
product management. "Google strives to detect every invalid
click that passes through its system," says Shuman Ghosemajumder,
the search engine's manager for trust and safety. "It's
absolutely in our best interest for advertisers to have
confidence in this industry."

That confidence may be slipping. A
BusinessWeek investigation has revealed a thriving click-fraud
underground populated by swarms of small-time players, making
detection difficult. "Paid to read" rings with hundreds or
thousands of members each, all of them pressing PC mice over and
over in living rooms and dens around the world. In some cases, "clickbot"
software generates page hits automatically and anonymously.
Participants from Kentucky to China speak of making from $25 to
several thousand dollars a month apiece, cash they wouldn't
receive if Google and Yahoo were as successful at blocking fraud
as they claim.

"It's not that much different from
someone coming up and taking money out of your wallet," says
David Struck. He and his wife, Renee, both 35, say they dabbled
in click fraud last year, making more than $5,000 in four
months. Employing a common scheme, the McGregor (Minn.) couple
set up dummy Web sites filled with nothing but recycled Google
and Yahoo advertisements. Then they paid others small amounts to
visit the sites, where it was understood they would click away
on the ads, says David Struck. It was "way too easy," he adds.
Gradually, he says, he and his wife began to realize they were
cheating unwitting advertisers, so they stopped. "Whatever
Google and Yahoo are doing [to stop fraud], it's not having much
of an effect," he says.

Spending on Internet ads is growing
faster than any other sector of the advertising industry and is
expected to surge from $12.5 billion last year to $29 billion in
2010 in the U.S. alone, according to researcher eMarketer Inc.
About half of these dollars are going into deals requiring
advertisers to pay by the click. Most other Internet ads are
priced according to "impressions," or how many people view them.
Yahoo executives warned on Sept. 19 that weak ad spending by
auto and financial-services companies would hurt its
third-quarter revenue. Share prices of Yahoo and Google tumbled
on the news.

Google and Yahoo are grabbing billions
of dollars once collected by traditional print and broadcast
outlets, based partly on the assumption that clicks are a
reliable, quantifiable measure of consumer interest that the
older media simply can't match. But the huge influx of cash for
online ads has attracted armies of con artists whose activities
are eroding that crucial assumption and could eat into the
optimistic expectations for online advertising. (Advertisers
generally don't grumble about fraudulent clicks coming from the
Web sites of traditional media outlets. But there are growing
concerns about these media sites exaggerating how many visitors
they have -- the online version of inflating circulation.)

Continued in article

Click Fraud Gets Smarter
Internet ad-traffic scams could be ripping off as much as $1 billion annually.
Are Web companies like Google doing enough to foil them?

Internet ad-traffic scams could be ripping off
as much as $1 billion annually. Are Web companies like Google doing enough
to foil them?

Web consultant Greg Boser has an ingenious method
for sending loads of traffic to clients' Internet sites. Last month he
began using a software program known as a clickbot to create the impression
that users from around the world were visiting sites by way of ads
strategically placed alongside Google search results. The trouble is, all
the clicks are fake. And because Google charges advertisers on a per-click
basis, the extra traffic could mean sky-high bills for Boser's clients.

But Boser's no fraudster. He cleared the procedure
with clients beforehand and plans to reimburse any resulting charges.
What's he up to? Boser wants to get to the bottom of a blight that's
creating growing concern for online advertisers and threatens to wreak havoc
across the Internet: click fraud.

BILLION-DOLLAR QUESTION. The practice can
wildly skew statistics on the popularity of an ad, drain marketing budgets,
and enrich the scam artists behind it. While click fraud isn't new, the
methods for carrying it out--take Boser's clickbot software--are getting
increasingly sophisticated. And some advertisers, analysts and consultants
question whether Web companies such as Google (GOOG) and Yahoo (YHOO) are
doing enough to nip click fraud in the bud. "No one has any idea how much
of this is actually going on," says Boser. "So we're going to see how well
[the search engines] actually try to protect advertisers."

One of Boser's biggest challenges is putting a
finger on exactly how widespread the practice is. Some search consultants
say click fraud accounts for upwards of 20% of all traffic, and may generate
more than $1 billion in dubious sales a year. Others say those stats vastly
overstate the problem.

Now, one of the biggest players in fraud detection
aims to end the guessing. Fair Isaac (FIC), which analyzes 85% of U.S.
credit card transactions, in partnership with Web search consultancy
Alchemist Media, will unveil plans at this week's Search Engine Strategies
Conference for what it says is the most rigorous study ever of click fraud.
Fair Issac will invite companies to submit traffic data that can be mined
for aberrations that may signify fraud. "We've seen indications that the
overall losses due to click fraud could equal more than $1 billion [a
year]--larger than the total magnitude of credit card fraud in the U.S.,"
says Kandathil Jacob, Fair Issac's director of product marketing. "It's
certainly worth our effort to look at it."

MORE CLICKS, MORE DOLLARS. A rising number
of companies would agree. The percentage of advertisers listing click fraud
as a "serious" problem tripled in 2005, to 16%, according to a survey by the
Search Engine Marketing Professional Organization. Advertisers have filed
at least two class-action suits saying Google, Yahoo, and other search
engines ought to be more up-front about methods for combating the practice.
Google says the suits are meritless. Yahoo declines to comment.

And in January, Standard & Poor's equity analyst
Scott Kessler downgraded Google stock in part because he considers click
fraud a "notable risk" (see BW Online, 1/17/06, "S&P Downgrades Google to
Sell"). Among his concerns: the prospect of false clicks may sour companies
from placing ads on Google. He too says Google needs to be more forthcoming
on the issue. "No one has any idea as to what Google assesses [as] its own
percentage of clicks that are generated by fraud, no idea what that process
consists of, and all the things that are being done to battle it," he says.

The Internet Fraud Complaint Center (IFCC) 2001
Internet Fraud Report is the first annual compilation of information on
complaints received and referred by the IFCC to law enforcement or regulatory
agencies for appropriate action. From January 1, 2001 – December 31, 2001 the
IFCC web site received 49,711 complaints. This total includes many different
fraud types and non-fraudulent complaints, such as computer intrusions,
SPAM/unsolicited email, and child pornography. During this same time period, the
IFCC has referred 16,775 complaints of fraud, the majority of which was
committed over the Internet or similar online service. The total dollar loss
from all referred cases of fraud was $17.8 million, with a median dollar loss of
$435 per complaint. Some of the significant findings of this report
include:

•Internet auction fraud was by far the most reported
offense, comprising 42.8% of referred complaints. Non-deliverable merchandise
and payment account for 20.3% of complaints, and Nigerian Letter fraud made up
15.5% of complaints. Credit/debit Card fraud and Confidence fraud (such as home
improvement scams and multi-level marketing) round out the top five categories
of complaints referred to law enforcement during the year. Among those
individuals who reported a dollar loss, the highest median dollar losses were
found among Nigerian Letter Scam ($5,575), Identity Theft ($3,000), and
Investment fraud ($1,000) complainants.

•Nearly 76% of alleged fraud perpetrators tend to be
individuals (as opposed to businesses), 81% are male, and half reside in one of
the following states: California, Florida, New York, Texas, and Illinois. While
most are from the United States, perpetrators have a representation in Canada,
Nigeria, Romania and the United Kingdom.

•Over 70% of fraud complainants are male, half are
between the ages of 30 and 50 (the average age is 38.6), and over one-third
resides in one of the four most populated states: California, Texas, Florida,
and New York. While most are from the United States, the IFCC has received a
number of complaints from Canada, United Kingdom, Australia, and Japan.

•The amount loss by complainants tends to be related
to a number of factors. Business victims tend to lose more than individuals and
males tend to lose more than females. This may be a function of both online
purchasing differences by gender, and the type of fraud the individual finds
themselves involved in. While there isn’t a strong relationship between age
and loss, proportion of individuals losing at least $5,000 is higher for those
60 years and older than it is for any other age category.

•Electronic mail (E-mail) and web pages are the
two primary mechanisms by which the fraudulent contact took place. Nearly 70% of
complainants reported they had e-mail contact with the perpetrator.

Overview

The Internet Fraud Complaint Center (IFCC), which began
operation on May 8, 2000, is a partnership between the National White Collar
Crime Center (NW3C) and the Federal Bureau of Investigation (FBI). The IFCC’s
primary mission is to address fraud committed over the Internet. This is done by
facilitating the flow of information between law enforcement agencies and the
victims of fraud, information that might otherwise go unreported.

While the primary mission of the IFCC is to address
Internet fraud, the IFCC served a critical role for the United States starting
on September 11, 2001. On that date, just hours after the terrorist attacks in
New York, Pennsylvania and metropolitan Washington, D.C., the IFCC web site
served as the mechanism by which people filed online tips with the FBI regarding
these attacks. Tens of thousands of tips were received and processed in
real-time in the months following the tragedies, and some of the information
received proved useful in the subsequent criminal investigation.

The IFCC 2001 Internet Fraud Report is the first annual
compilation of information on complaints received and referred by the IFCC to
law enforcement or regulatory agencies for appropriate action. The results
provide an examination of key characteristics of 1) complaints, 2) perpetrators,
3) complainants, and 4) the interaction between perpetrators and complainants.
Overall, the results are intended to enhance our general knowledge about the
scope and prevalence of Internet fraud in the United States.

General IFCC Filing Information

From January 1, 2001 – December 31, 2001 the IFCC web
site received 17,138,551 “unique” web hits 1 . The number of complaints
filed during the year equaled 49,711. During the same time period, 33,940
complaints were referred to enforcement agencies on behalf of the filing
individual. This total includes many different fraud types and non-fraudulent
complaints, such as computer intrusions, SPAM/unsolicited email, and child
pornography 2 . The IFCC averaged 1,428,212 “unique” web hits per month. The
number of complaints filed per month averaged 4,142.

The IFCC saw a significant increase within the year of
complaint filings from the January – March period (total complaints 7,040) to
the October – December period (total complaints 15,878). Finally, an average
of 2,828 (both fraudulent and non-fraudulent) complaints were referred per
month.

The IFCC referred 16,775 complaints of fraud during the
2001 calendar year. Even though the IFCC’s primary mission is to address fraud
committed over the Internet, those complaints involving only the more
traditional methods of contact (e.g., telephone and mail) were also referred on
behalf of the individual filing a report. Using information provided by the
complainant, it is estimated that just over 90% of all fraud complaints are
related to the Internet or online service. Each complaint is usually referred to
multiple agencies, based on where the subject(s) and victims(s) reside(s).
During the 2001 year, each referral was sent to an average of three law
enforcement and regulatory agencies; overall, 2,711 unique law enforcement and
regulatory agencies around the United States received complainant filings.

The results from this report were based on information
that was provided to the IFCC on the complaint forms submitted via the Internet
by complainants. These complaints were subsequently referred to law enforcement
and regulatory agencies. This report may not represent all victims of Internet
fraud, or fraud in general, because it is derived solely from the people that
reported to the IFCC. Care must also be taken in comparing these results with
those from the IFCC Six-Month Data Trends Report. On January 11, 2001 a new
complaint form was implemented and over the past year the IFCC has automated
many of its processes; this has resulted in more relevant, accurate, and
complete data. The culmination of these efforts is a report that continues to
serve as an awareness tool for the general public and those groups responsible
for controlling Internet-related fraud.

WiredSafety --- http://www.wiredsafety.org/
This is a great site for data about use of the Internet. It is also a very
good sight about safety in use of the Internet, including dangers of fraud,
crime, and sexual predators.

One of the Web sites
operated by this particular spammer is called salesscape.com,
and links related to the site showed hundreds of customer orders in .txt
files.

The exposed data
includes what item was purchased, customer names, street addresses, phone
numbers and e-mail addresses, but apparently not credit card numbers.

Sites like this are
often totally unsecured, which is a good reason not to do business with them,
said a spokesman for Symantec.

And for anyone
wondering why spammers do what they do, the sheer number of customer orders
for this one spammer alone tells the story.

There is lots of
money to be made, which accounts for why an estimated 76 billion spam e-mails
will be sent worldwide in 2003, at an average cost to the spammers of 0.00032
cents per message, according to figures from eMarketer.

One of the recent
spam e-mails touting this software sales site came from
"first_response005@yahoo.com" and advertised Norton SystemWorks 2003
Software Suite -Professional Edition.

The e-mail touted
"Five Feature-Packed Utilities...For One Great Price... A $300-Plus
Combined Retail Value... YOURS for Only $39.99!" That software package
normally sells for about $70 or less on Amazon.com. It includes Norton
AntiVirus 2003, Norton Ghost 2003, GoBack 3 Personal Edition, Norton Utilities
2003 and Norton CleanSweep 2003.

Clicking on the link
in the e-mail takes one to www.salesscape.com,
which may be shut down by now, but which earlier listed the software package
and linked to an order page
that requests payment, either by clicking on a button or by snail mail to
"G.A. Moore - PO Box 19803 - Baltimore, MD 21225."

A whois check on the
site shows it is registered to Maryland Internet Marketing, with the
administrative contact being one George Moore Jr., 300 Twin Oaks Road,
Linthicum, Md. 21090. There was no answer when a reporter called the phone
number listed.

The order form
instructs potential customers to enter their addresses and a credit card
number, then push a "send" button or print the form out and mail it.
It also says that the software comes with no retail packaging and the
"manuals are built into the programs." Customers are also given an
opportunity to buy Roxio EZ CD Creator for another $29.99.

A Symantec spokesman
said that "one of the key indicators of pirated software is the fact that
retail packaging is not included."

Ten Ways to Reduce
Chargebacks and Fraud Merchants' concern about online credit card
fraud and chargebacks is rising at a significant rate. According to
the 2001 Online Fraud Report conducted by Mindwave Research, 41
percent of merchants say the issue of online credit card fraud is
"very serious" to their business. http://www.newmedia.com/default.asp?articleID=3443

Beware of the fine print in popular gift
cards issued by major stores.
Each $50 card may decline by as much as 5% per month even though you
paid full value up front. Looks like a consumer rip off from the
big chain retailers.

"Gift Cards May Bite
Recipient," by Lisa Munoz, San Antonio Express News,
September 22, 2003 (the article originally appeared in the Orange
County Register).

Gift cards
have steadily grown in popularity with both retainers and consumers
since the 1990s. But the Vinsons, and an increasing number of
other consumers, have learned that gift cards can come with many
strings attached.

Take for example the recent
e-mail you forwarded me on Lee Marvin and Bob Keeshan (Capt.
Kangaroo). It seemed true enough as I remembered the Lee Marvin was
indeed a Marine who had served in the Pacific in WWII. However, it
seems someone has embellished the truth (for whatever their own
reason) and now that e-mail is making the rounds:

Another one I thought was
true following 9/11 was the one about the Budweiser delivery truck
removing its beer from the shelves of a mini-market in which the
middle eastern owner/employees were celebrating the 9/11 attacks. I
never questioned the e-mail because it seemed so true. I was to
learn months later that this was a complete fabrication, although
I'm sure celebrations like this probably occurred. The point is that
someone created the e-mail to stir up patriotic fervor. No matter
the intention, it just goes to show that you can't take what you
receive on the Internet for granted. It pays to check it out, and
this website serves as a good source. By the way, here's the answer
to the Budweiser item:

SEVENTEEN Manhattan property tax assessors
have been accused of taking bribes from property tycoons in what is
billed as “the biggest rip-off in New York City’s history”.
The 500 buildings that are said to have benefited from lower
taxation range from skyscrapers, including the headquarters of the
financial services company owned by Michael Bloomberg, the New York
Mayor, and two United Nations buildings down to a McDonald’s
burger bar.

None of the property- owners has been
indicted and it is not known how much they knew. James Comey, a
federal prosecutor, who has been unravelling the racket for two
years, said: “The investigation is continuing.”

The tax fraud, which is said to have been
going on for 35 years, is believed to have cost the city at least $1
billion (£700 million) in lost revenue and involved 18 city
officials who were paid a total of $10 million to reduce tax bills.
New York derives a fifth of its income from property taxes.

Mr Bloomberg said: “It has gone through
six Mayors and innumerable commissioners of finance. The bottom line
is: no one caught it until recently. We’ve got to make sure that
it doesn’t happen again.”

Mr Comey, announcing a total of 572
charges, said: “These defendants committed a breathtaking betrayal
of the public trust. “(The assessors responsible) sold their
office and sold out the people of New York by taking bribes. In
doing so, they undermined a bedrock of this city’s finances: a
fair and honest tax assessment system.”

The accused, all but two working in the
city’s Department of Finance Real Property Assessment Unit, are
said to have formed a “racketeering enterprise” that cheated New
Yorkers by causing higher taxes and inhibiting spending on schools
and public services.

They are said to have supplemented their
$60,000 legitimate incomes with bribes of between $500 and $15,000,
which were handed over during secret meetings in Manhattan coffee
shops and restaurants. They adopted nicknames such as the King Maker
and Harry Potter.

“Everybody was getting a piece of the
pie,” Barry Mawn, head of the FBI in New York, said. “They were
protecting one another. It was kept very quiet and everybody was
benefiting.” He estimated that the scam has cost the city $160
million in the past four years.

The city will try to recoup the losses from
the buildings’ owners and already has started proceedings to
recover $170 million from the defendants. The chief accused is
Albert Schussler, 85, nicknamed “the Old Man”, a former tax
assessor who from 1967 acted as a “tax consultant” for some of
the wealthiest landowners in the city. It is alleged that the lower
he fixed the tax, the more he was paid.

Mr Schussler is accused of paying $10
million in bribes to property tax assessors since 1967, including
bribes to Joseph Marino of $4.1 million over six years. Marino
pleaded guilty in April 2000 and provided the information leading to
yesterday’s court hearing. If convicted, Mr Schussler faces 25
years in jail for racketeering, bribery and mail-fraud. He and 16
others were arrested on Monday. All were bailed. Another man is
expected to give himself up today

Social Networking Dangers

Colleges warn about networking sitesIncoming college students are hearing the
usual warnings this summer about the dangers of everything from
alcohol to credit card debt. But many are also getting lectured on a
new topic - the risks of Internet postings, particularly on popular
social networking sites such as Facebook. From large public schools
such as Western Kentucky to smaller private ones like
Birmingham-Southern and Smith, colleges around the country have
revamped their orientation talks to students and parents to include
online behavior. Others, Susquehanna University and Washington
University in St. Louis among them, have new role-playing skits on
the topic that students will watch and then break into smaller
groups to discuss. Facebook, geared toward college students and
boasting 7.5 million registered users, is a particular focus. But
students are also hearing stories about those who came to regret
postings to other online venues, from party photos on sites such as
Webshots.com to comments about professors in blogs.
"Colleges warn about networking sites," PhysOrg, August 2,
2006 ---
http://physorg.com/news73762121.html

Diamond Rating Scams

The Diamond Rating Scandals: Did you pay to much
for a diamond?
I'll just bet your finance also bought you those phony Lean
Macleans pawned off at McDonalds Restaurants.The still-unfolding scandal
over diamond ratings is fueling anxiety among both jewelers
and jewelry customers. Laboratory workers at the leading
rater of diamonds in the world, the Gemological Institute of
America, are being accused of taking bribes to give
higher-than-deserved ratings to stones. The GIA, which in
October fired four lab workers after a four-month internal
investigation, says only a handful of rogue dealers and a
relatively small number of stones were involved. But the
institute isn't saying how many stones may have bogus
ratings. The incident has diamond buyers around the world
wondering if they overpaid for their purchase.
Ann Zimmerman and Raymud Flandez, "Getting a Second Opinion
On Your Diamond: Bogus Ratings on Some Gems Fuel
Anxiety Among Buyers; GIA Offers Free Reappraisals," The
Wall Street Journal, December 21, 2005; Page D1

. . .

Diamonds are graded by the GIA after
being inspected under a microscope for internal flaws, and the
color is measured against a set of master stones reflecting the
spectrum of color ratings. Three graders look at the diamond
independently and then the stone is given a grading report, or
certificate, that lists its color and clarity rating, in
addition to its weight and cut.

Of course, getting an accurate rating
is only part of the challenge. Consumers need to make sure they
aren't paying too much for a stone that has been properly rated.
They can turn to resources such as Diamondhelpers.com, a
consumer-focused Web site that doesn't sell diamonds. It has a
price finder where consumers can enter information from the
diamond's certificate -- such as color, cut, carat weight and
clarity grade -- and get an idea of its value.

The diamond-grading scandal erupted
after a prominent diamond dealer filed a lawsuit earlier this
year charging that workers at the GIA lab in New York had
improperly graded stones sold in 2001 for $15 million to members
of the Saudi royal family. The Saudis later had an independent
evaluation done and got their money back. The GIA is on the
brink of settling the lawsuit, say people familiar with the
situation.

Joseph Tacopina, the attorney
representing the diamond dealer in the lawsuit, says that he has
gotten calls from dozens of consumers worried about the accuracy
of the grading certificates on their diamonds. He understands
their concern. "A difference in just two levels of a grade can
mean a lot of money and the average consumer, of course, can't
tell the difference," says Mr. Tacopina.

Jonathan Grella, a Washington PR
executive, says he has definitely taken note of the scandal. He
became engaged just two weeks ago, after months of learning the
ropes about buying a diamond.

"I learned that a certificate is a
must," he says, adding that he isn't sure whether he will get
the ring reevaluated by another lab.

"This could send shock waves, not just
through the jewelry and insurance industries," he says. "Can you
imagine, going back to your bride-to-be and saying, 'I don't
mean to alarm you, but the ring may not be what the certificate
says it is.' That could make for some interesting holiday
conversation."

Oct. 21, 2002 (Internet World) —
These are not the best of times to be sitting in the chief
executive's chair of a lot of companies. If a bear market weren't
bad enough, chief executives are being put directly in the bull's
eye of public and political ire over financial accounting scandals
that at their worst have sucked billions of dollars out of the
market, and at the least have depressed the market rebound.

That pressure will be felt far beyond just
the 947 public companies whose CEOs and CFOs have been forced by the
Securities and Exchange Commission to certify the truthfulness of
their financial reports. And though that move by the SEC was largely
a publicity stunt (you can even go to the SEC's Web site and view
the sworn statements from these executives), the question arises
about whether technology can play a part in providing protection for
investors and company executives.

"It's quite an interesting
topic," says Kraig Haberer, a former CPA at Price Waterhouse
who now serves SAP AG as director of product marketing for its mySAP
Financials suite. "Technology can be an enabler; however, it
cannot replace good judgment." He notes that the situations
that have blackened corporate images today are primarily caused, not
by a lack of technology, but by bad judgement by a few key
executives.

"However, I do think technology can
help minimize the chance of occurrences of either outright fraud or
purely overlooking something in an account," Haberer says.
"To some degree, the more automated you can make your processes
and your financial reporting and accounting, the better off you are
because technology can be that independent third party. You have a
lot of companies with multiple data feeds they are pulling from.
That process of recording, processing, and reporting on that
information is not automated, and you can introduce the likelihood
of just pure error, nothing fraudulent. So technology can be that
third party that can automate and integrate that process and
minimize the opportunities for error."

The mySAP response is to give the finance
department a number of automated tools for handling the complexity
of financial reporting in the modem global enterprise. That can make
it more difficult for an unscrupulous person somewhere in the mix to
introduce unethical practices, but it still may not be enough to let
the CEO relax. "You also have to empower that chief officer
with the information at his desk," Haberer says. MySAP offers
an executive dashboard, where you can specify the key indicators you
want to track at a high level and see their performance over time.
Simply by having lowerlevel executives know they're being watched
may not eliminate the threat, but if you sense a problem, you will
at least know what questions to ask.

To others, the problem is a security matter
related to protecting the integrity of the data in the enterprise's
financial systems. In August, Datum Inc. and WetStone Technologies
Inc. jointly announced a new subscription service, called Time Lock
for Microsoft Word that lets users embed secure and auditable
digital time stamps into their work. They then have a document that
can be verified for authenticity and time accuracy.

"If I was a CEO of a company and I had
to sign off on the financial statements, I would want to know that
my records are absolutely protected," says Steve Corie, who is
in fact the CEO and president of a company, Perimeter Data Inc.
Perimeter recently began selling a product that takes Datum's idea
to its logical conclusion: it makes it so that any files-email,
video, a series of sequential documents, voice mail, etc.-are
stamped, signed, and archived in a way that makes it impossible to
delete or modify. "CEOs have a fear, that if they do sign off
on something, they have to rely on people down the
organization," he adds.

For Comrie, the key point is that the data
is viable and can be proven legally in a court of law, if necessary.
He sees a future in which a brokerage house under investigation
might say certain e-mails being sought by investigators have been
deleted or don't exist, but their auditor steps in with the records
it keeps from its collaboration with its brokerage client, and
produces the digitally signed, time stamped, and sealed files. That
might actually create a headache for an unscrupulous chief
executive, but that headache, at least, would be well deserved.

"There's no way even an administrator
with access can go in and delete or manipulate data" with
Perimeter's system, says Comrie. "We believe there is a
vulnerability most corporations will never talk about, that at the
end of the day some of this stuff will be challenged in a court of
law-some will be brought forward as evidence."

The ultimate answer for corporate financial
accountability is not technological, of course. If a company's
executives or directors are concerned about their financials, the
answer lies in the integrity of the people managing the financial
records. But company leaders can invest in certain technology that
can help them detect problems before they become disastrous
headaches, whether the problem was man-made or a simple result of
people tripping over too-complex financial regulations.

Flexible Solutions
for Any E-Business Problem
mySAP.com solutions are open and flexible, supporting databases,
applications, operating systems, and hardware platforms from most
major vendors. They also uphold the highest quality
standards and deliver unparalleled levels of performance. And
they're appropriate for virtually any organization, from global
enterprise to small and midsize business.

What's more, SAP provides Business
Maps to help you visualize, plan, and implement a coherent,
integrated, and comprehensive solution.

Accounting Fraud
--- they do it because it usually pays very well even if they get
caught!

It is better and
much more lucrative to ask for forgiveness than permission.

February 2003
The 8th Ernst & Young Global Fraud Survey, "Fraud: The
Unmanaged Risk," based on a survey of 400 CEOs in more than 30
countries, reveals that, despite attempts to improve corporate
governance in the wake of recent financial scandals, more than half of
the companies interviewed had suffered a significant fraud in the last
two years. Moreover, some 85% of the worst frauds were by insiders on
the payroll. When asked what keeps them up at night, participants were
significantly more concerned about asset misappropriation than any
other kind of fraud. ---http://www.ey.com/global/download.nsf/South_Africa/Jan03_8th_Global_Fraud_Survey/$file/8th%20Global%20Survey.pdf

Some of the biggest challenges facing
business today are re-establishing confidence among investors,
promoting ethics and integrity in the workplace, and establishing
clarity in reporting procedures. This resource center will give you
the tools and information you need to combat fraud — whatever your
role in the business community.

The North American Securities
Administrators Association provides a listing of the top 10 investment
scams being investigated by state securities regulators. Some of the
examples published by NASAA have involved accountants and may serve as
current examples to use in ethics teaching --- http://www.nasaa.org/nasaa/abtnasaa/display_top_story.asp?stid=307

"Top
10" Investment Scams Listed by State Securities Regulators

WASHINGTON (August 26, 2002) – State securities regulators today
released a list of the “Top 10” scams, risky investments or
sales practice abuses they’re fighting. New to the third annual
list are unscrupulous brokers, conflicts of interest in analyst
research, charitable gift annuities, and oil and natural gas scams.

“Record-low interest rates and a bear market on Wall Street have
created a bull market in fraud on Main Street,” said Joseph Borg,
president of the North American Securities Administrators
Association (NASAA)¹ and director of the Alabama Securities
Commission. “Con artists know investors are concerned about the
volatile stock market and low yields on bonds and bank deposits, so
they pitch their scams as safe alternatives and promise high returns
– an impossible combination.”

The 2002 list was again topped by independent insurance agents
selling risky or fraudulent securities. Borg said that while most
independent insurance agents are honest professionals, too many are
letting high commissions lure them into selling high risk or
fraudulent investments.

The federal war on terror and large budget deficits at the state
level are diverting or pinching resources to fight investment fraud,
Borg warned.

“Putting people in jail gives investors the biggest bang for their
regulatory buck,” said Borg. “So legislators at all levels need
to ensure that regulators and prosecutors have sufficient resources
to successfully bring securities fraud cases.”

Here are the “Top 10” investment scams, ranked roughly in order
of prevalence or seriousness:

1. Unlicensed individuals, such as independent insurance agents,
selling securities.
In hundreds of cases from Washington state to Florida, scam artists
are using high commissions to entice independent insurance agents
into selling investments they may know little about. The person
running the scam instructs the independent sales force – usually
insurance agents but sometimes investment advisers and accountants
– to promise high returns with little or no risk. For example:
· In an alleged scam sold almost entirely by independent insurance
agents, investors in at least 14 states lost close to $30 million.
According to Ohio securities regulators, money raised from the sale
of fictitious limited partnerships was used to make interest
payments to another group of promissory note investors. Both groups
were promised double-digit returns. In April a court issued a
preliminary injunction and appointed a receiver in connection with
the allegations. (The NASAA says the persons running these scams are usually
independent insurance agents, but some have been investment advisers
or accountants.)

· Earlier this month, an Arizona insurance agent was sentenced to
10 years in prison for selling $1.8 million in worthless stock and
bogus promissory notes to investors. Another Arizona insurance agent
was sentenced in May to five years in prison for scamming 32 elderly
investors out of nearly $2 million by first soliciting them to
purchase ‘living trusts’ and then switching them into annuities
and finally into bogus promissory notes. A third Arizona insurance
agent, working with his two sons, scammed $16.2 million by selling
high risk brokered CDs, viatical contracts, real estate deals and
equipment leases. They were ordered to repay all $16.2 million and
fined another $133,000.

To verify that a person is licensed or registered to sell
securities, call your state securities regulator. If the person is
not registered, don’t invest.

2. Unscrupulous stockbrokers.
The declining stock market has caused some brokers to cut corners or
resort to outright fraud, say state securities regulators. At the
same time, some investors have grown more cautious and are
scrutinizing their brokerage statements for unexplained fees,
unauthorized trades or other irregularities. In North Dakota,
regulators investigated a complaint from an investor who received
conflicting account statements. They discovered that two brokers
working for H.D. Vest Investment Securities Inc. issued phony
account statements to cover up losses from hundreds of unauthorized
trades. The brokers had also made unsuitable recommendations such as
risky options contracts. Under a settlement with state securities
regulators, H.D. Vest agreed to repay clients’ out-of-pocket
losses plus 6 percent, totaling over $3.2 million.

In New York, the attorney general’s office took action against
seven brokers and two firms for bilking hundreds of elderly
investors out of more than $12.5 million through a pay telephone
scam. The brokers pressured investors into liquidating their CDs,
annuities and IRAs, sometimes at significant penalty, and promised
them “risk-free” 14 percent returns. So far one firm has agreed
to pay $5.9 million in restitution.

3. Analyst research conflicts.
In May, the New York Attorney General’s office concluded a
10-month investigation into whether Merrill Lynch had issued
misleading research reports by entering into a settlement agreement
with the firm. Under the agreement, Merrill Lynch agreed to pay a
$100 million fine and make significant changes to way it does
business. NASAA is assisting a multi-state task force investigating
conflict of interest issues at Wall Street firms. The primary focus
of the ongoing investigation is to determine whether analysts issued
glowing research reports and made “buy” recommendations in order
to win investment-banking business. State investigators are now
reviewing materials provided by a dozen firms for possible
securities law violations.

In June NASAA learned of an attempt by Morgan Stanley Dean Witter to
amend an early version of the Sarbanes-Oxley Act with language that
would have ended the states’ probe into whether Wall Street
analysts intentionally misled investors. NASAA held a press
conference and met with lawmakers; the draft amendment was
ultimately not included in the bill.

4. Promissory notes.
These are short-term debt instruments often sold by independent
insurance agents and issued by little known or non-existent
companies promising high returns – upwards of 15 percent monthly
– with little or no risk.

In June, four Georgia-based scam artists were each sentenced to 17
½ years in prison for recruiting independent insurance agents to
sell millions of dollars worth of bogus promissory notes. While
investors were promised nine-month returns as high as 21 percent,
half of each investment went straight to commissions that were
divided among company principals and sales agents. Acting on a tip
from the Better Business Bureau, Georgia securities regulators
seized nearly $5 million of the $8 million stolen from local
investors and, together with federal investigators, used the
evidence uncovered to broaden their investigation and prepare
criminal charges. In the end, the Federal Bureau of Investigation,
working with Georgia regulators, found the ringleader – Virgil
Womack – had scammed over $150 million from investors nationwide.
Of the $150 million, nearly $90 million was seized and returned to
investors. The average age of the victims was 68.

In another case, a Maine court sentenced an insurance agent to seven
years in prison for running a promissory note scam that took 25
investors for more than $1 million. The agent, who was sentenced in
June, told investors the notes were “better than certificates of
deposit and life insurance policies,” regulators said, and that
they would yield 10 percent to 12 percent returns annually.

“A 12 percent return may not seem over-the-top by bull market
standards, but it’s far more than banks are offering now for
insured deposits,” said Chris Bruenn, administrator for the Maine
Office of Securities and NASAA’s president-elect.

5. “Prime bank” schemes.
Scammers promise investors triple-digit returns through access to
the investment portfolios of the world’s elite banks. Purveyors of
these schemes often target conspiracy theorists, promising access to
the “secret” investments used by the Rothschilds or Saudi
royalty.

In Texas, a Harlingen-based con artist promised returns of 6 percent
to 8 percent a month through a secretive web of money dealers
supposedly set up by a coalition of governments in 1914 to pay for
World War I debt. In videotape shown at Monday’s press conference,
the promoter claimed that seven “world traders” control the
entire global money supply. In the end, the scam took over 300
investors for roughly $6 million.

6. Viatical settlements.
Originated as a way to help the gravely ill pay their bills, these
interests in the death benefits of terminally ill patients are
always risky and sometimes fraudulent. The insured gets a percentage
of the death benefit in cash and investors get a share of the death
benefit when the insured dies. Because of uncertainties predicting
when someone will die, these investments are extremely speculative.
In a new twist, Pennsylvania regulators say “senior settlements”
– interests in the death benefits of healthy older people – are
now being offered to investors.

In June, 15 individuals were indicted in connection with a scam that
cost hundreds of investors nationwide at least $100 million. State
securities and insurance regulators, together with federal
regulators, allege the individuals, employed by Liberte Capital
Group, were involved in a scheme to buy life insurance policies from
terminally ill individuals who lied to insurance companies about
their medical conditions. Liberte managers used investor funds to
support lavish lifestyles, including investments and the purchase of
large homes and dozens of boats and cars. A receiver has been
appointed in the case.

7. Affinity fraud.
Many scammers use their victim’s religious or ethnic identity to
gain their trust – knowing that it’s human nature to trust
people who are like you – and then steal their life savings. From
“gifting” programs at some churches to foreign exchange scams
targeted at Asian Americans, no group seems to be without con
artists who seek to take advantage of the trust of others.

In Alabama, nine individuals have been charged with scamming
parishioners at the Daystar Assembly of God church in Prattville out
of more than $3 million. Investors were told their money would be
used to purchase retirement properties in Florida. The income
generated by the Florida properties would be used to payoff the
mortgage of the Prattville church and build a religious theme park,
investors were told. In reality, state securities regulators allege,
the money went to pay off investors in a previous scam and to
purchase equipment for unrelated businesses.

8. Charitable gift annuities.
(As an example, NASAA describes a Ponzi scheme ran through a
network of independent insurance agents, financial planners and accountants.)
These annuities are transfers of cash or property to a charitable
organization. The value of the annuity is less than the value of the
cash or property, with the difference constituting a charitable
donation. While most annuities offered by charitable organizations
are legitimate investments, investors should be cautious of
little-known organizations or those that provide only sketchy
information.

In Arizona, regulators uncovered a scam that took 430 investors
nationwide for an average of $133,000. The scam involved the
purchase of charitable gift annuities from the Mid-America
Foundation. According to regulators, Robert Dillie, founder of
Mid-America, ran what amounted to a $54 million Ponzi scheme through
a network of independent insurance agents, financial planners and
accountants. Dillie used investors’ funds to purchase three homes
in Las Vegas, a ranch in South Dakota, pay child support, book
charter flights and support his extensive gambling.

Magdalena Scheller, 68, of Phoenix, invested more than $400,000 in
Mid-America. A life insurance agent approached her after her husband
died.

“It makes you wonder if there are any honest people out there,”
Scheller said at Monday’s press conference.

“Unfortunately, Mid-America is not an isolated scam,” Mark
Sendrow, director of securities for the Arizona Corporation
Commission told reporters Monday. “We are looking at two more
foundations in the Phoenix area which have issued millions of
dollars of charitable gift annuities in the last few years, and both
were basically penniless before they began issuing them.”

9. Oil and gas schemes.
These scams follow the headlines, rising in frequency with
predictions of oil shortages or a rise in natural gas prices. In
Arkansas, securities regulators forced Energy Consultants and
Ark-La-Tex Consulting Co., L.L.C. to discontinue their marketing
efforts after finding a natural gas well touted to investors as a
‘can’t lose’ opportunity hadn’t produced in years.

10. Equipment leasing.
While the majority of equipment leasing deals are legitimate,
thousands of investors have been scammed by individuals selling
interests in payphones, ATMs or Internet kiosks. In a typical
equipment leasing scam, a company sells a piece of equipment through
a middleman. As part of the sale, the company agrees to lease back
and service the equipment for a fee. Investors are promised high
returns with little or no risk. But state regulators say high
commissions paid to salesmen and promised returns that are
unrealistically high doom many projects. In North Carolina,
regulators took action against an individual who sold an Internet
kiosk to an investor for $24,950, promising a 17 percent return. The
individual had previously sold payphone leases to investors from a
company that later filed for bankruptcy.

Before investing, state securities regulators urge investors to call
their offices and ask if the individual selling the investment is
licensed to do so. Regulators say investors can also save themselves
a lot of grief by asking a second question – whether the
investment itself is registered. To check out an investment or
salesperson, contact your state securities regulator. Their phone
number is in the white pages of your phone book under
“government” or available online at www.nasaa.org.

The web link below is to a report of
potentially enormous significance to the accounting profession. It
concerns an insurance company specialising in workers compensation
insurance which collapsed in Australia about 2 years ago, leaving a
deficiency of about $A5 billion.

The report analyses a number of accounting
and auditing issues, including: provisioning for complex
liabilities; accounting for assets such as goodwill, future income
tax benefits, deferred costs such as IT and marketing related; the
nature of going concern.

There are several matters of interest.

The first may be that Andersen's audit
approach is analysed in great detail. HIH was one of Andersen's
biggest clients in Australia. The judge who presided over the
Commission does not directly conclude that Andersen was conflicted.
However, he does draw out the following features of the auditors'
relationship with HIH's management: Audit staff were assessed
against 'conerstone' measures, important amongst which were
on-selling of new business. Some internal memoranda make interesting
reading in this regard. (Again, as with Enron, the British branch of
Andersens comes out with their reputation intact.) The engagement
partner held a meeting with members of the audit committee because
he was unhappy with some of the accounting. The meeting was held
without management. The partner was taken off the assignment. Also
of interest is the consideration of audit evidence obtained by
Andersen's to support carrying values of assets. In the case of what
is referred to as Deferred Acquisition Cost (the deferral of
marketing costs against the future recognition of premium revenue),
Andersens claimed that the financial controller did an impairment
review. In evidence to the Commission, the financial controller said
he was completely unaware of the requirement until after he had left
HIH!

Of most significance is the damning
criticism of the Australian standard setting process. The judge
singles out the Australian insurance standard and its standard on
goodwill. In the first case he said that the standard setting
process was not independent of the industry for whom the standard
was set. He then compared the resulting standard unfavourably with
solvency requirements laid down by a government regulator, the
regulator requiring completely different accounting based more on
the conceptual framework than the 'matching' concept underlying the
standard. (It is the foolish adherence to 'matching' that has given
rise to the carrying of marketing cost as an asset.)

In the case of goodwill the judge concludes
the standard to be deeply ambiguous. He then concludes that the
standard setting process is deficient because it lacks input from
proper legal draughtsmen. In saying this it needs to be borne in
mind that Australia and New Zealand are unique in conferring on
standards the express force of law. In view of the criticism of FASB
and its propensity for legalism in the wake of the Enron matter, the
judge's criticism is particularly ironic.

E"x Official of Vatican Pleads Guilty in Conspiracy," by
Paul Zielbauer, The New York Times, September 6, 2002

A retired Vatican official who is an expert
on Catholic canon law pleaded guilty today to a federal conspiracy
charge for his role in an international insurance swindle run by
Martin R. Frankel, the Greenwich financier who is now in prison.

In a signed statement, Msgr. Emilio
Colagiovanni, 82, whose career included sitting on the board that
provides legal counsel to Pope John Paul II, pleaded guilty to
conspiracy to commit wire fraud and launder money. He faces a
maximum of five years in prison and a $250,000 fine.

In the six-page statement, Monsignor
Colagiovanni, an Italian citizen and a priest for 60 years, said
that in 1998 and 1999 he helped Mr. Frankel defraud American
insurance companies that Mr. Frankel wanted to buy. His
contribution, he said, was allowing his own Rome-based foundation,
the Monitor Ecclesiasticus Foundation, which publishes a journal of
canon law edited by the monsignor, to siphon $50 million of Mr.
Frankel's money into a second foundation. It had been created by Mr.
Frankel specifically to acquire the companies, the monsignor
acknowledged.

Case Studies and Questions --- http://riskinstitute.ch/
“Lessons From the Collapse of Hedge Fund, Long-Term Capital
Management” at the International Financial Risk Institute.
This case study also includes an analysis of what caused the collapse
and offers CPAs the same credit risk instruction the world’s bank
regulators received. In addition, the site’s Dictionary of Financial
Risk Management has detailed definitions for financial analysts and
managers.

The American Accounting
Association recently published a monograph (with CD ROM) -- Studies in
Accounting Research Volume No. 33. Empirical Research in Auditor
Litigation: Considerations and Data By Zoe-Vonna Palmrose Published 2000, 90 pages. Members $15.00
Nonmembers $20.00

The Internal Revenue Service
issued a nationwide alert to taxpayers warning them not to fall victim
to one of the "Dirty Dozen" tax scams. These schemes take
several shapes, ranging from false claims of slavery reparations to
illegal ways of "untaxing" yourself. http://www.accountingweb.com/item/70990

The
Stanford Securities Class Action Clearinghouse provides detailed
information relating to the prosecution, defense, and settlement of
federal class action securities fraud litigation. The Clearinghouse
identifies 1238 issuers that have been named in federal class action
securities fraud lawsuits since passage of the Private Securities
Litigation Reform Act of 1995. To view a searchable index of these
issuers click here. The Clearinghouse also contains full text
searchable copies of more than 2000 complaints, briefs, filings, and
other litigation-related materials filed in these cases. To search
these documents click here. The Clearinghouse takes no position
regarding the merits of individual claims.

The
Clearinghouse offers regular updates identifying companies that have
recently been named as defendants in federal class action securities
fraud complaints. If you would like to receive this information,
please register here.

In
addition, the Clearinghouse provides access to a range of research
reports and analyses that relate to the evolution of federal class
action securities fraud litigation since passage of the Private
Securities Litigation Reform Act of 1995. To view these materials
click here.